Guest column submitted by U.S. Senator Mike Crapo
Even as Idahoans are reeling from pain at the pump, shock in the grocery aisles and continued erosion of their paychecks, Democrats continue to advocate for using partisan budget tools to raise taxes and increase spending.
Inflation rates are highest in the Mountain West: According to the Joint Economic Committee’s inflation tracker, which tracks how much more the average household pays today to maintain the same standard of living it achieved in January 2021, families in the Mountain West are facing the highest inflation rates, with prices today 14.9 percent higher than in January 2021 for both regions. Idahoans are paying $739 more per month, or $8872 annually.
At the same time, Democrats continue to pursue their reckless tax-and-spending agenda instead of focusing on pro-growth economic policies that would help working families experiencing inflation’s sting.
Tax hikes will not lower inflation: Analysts at the nonpartisan Penn Wharton Budget Model scrubbed the mislabeled “Inflation Reduction Act of 2022,” finding that it will not reduce inflation when America needs it most, but could actually slightly increase inflation at the worst time. Any claim that this legislation is inflation-reducing is false advertising, with no analytical support. Tax increases would worsen inflation by further suppressing the supply side of the economy, including by depressing investment and productivity growth as well as labor supply when labor force participation remains low.
Tax hikes would kill jobs and wages: The nonpartisan Joint Committee on Taxation (JCT) confirmed the bill will increase taxes on millions of Americans, with nearly $17 billion in revenue from taxpayers earning under $200,000 per year in 2023 alone. The JCT also confirmed the majority of tax hikes fall squarely on the manufacturing sector, exacerbating supply-chain disruptions, and ultimately costing U.S. jobs and investment. Massive tax hikes will devastate working families with lower wages and even higher prices. Retirees on fixed incomes watching their nest eggs shrink will face greater hardship.
Tax hikes would be another blow as small businesses and workers try to get our country out of this economic mess: The National Federation of Independent Business reported its Small Business Optimism Index dropped to 89.5 in June, marking the sixth consecutive month below the 48-year average of 98. Expectations for better conditions have worsened every month this year. Consumer confidence has dropped to its lowest level since February 2021, the month directly prior to enactment of the inflationary American Rescue Plan spending spree.
Tax hikes imposed on a struggling economy will push us further toward recession: GDP has declined for two consecutive quarters as inflation continues to rage. Democrats’ economic policies took an economy rapidly recovering from pandemic shutdowns—a recovery fueled by the underlying pro-growth Tax Cuts and Jobs Act tax policies—and turned it into an economy suffering from painful stagflation. Splitting hairs on the technical definition of a ‘recession’ is a distraction from the pain Americans continue to feel at the gas station, in stores and from threats of a declining economy. Americans and small businesses are hurting, as consumer and business confidence and outlooks continue to crater.
Idahoans are already suffering from inflation, the most punitive stealth tax there is. Ongoing attempts to raise taxes and increase spending would be another policy mistake that would further weaken the economy and the wellbeing of all Americans. Instead of pursuing more of the same, failed tax-and-spend policies that cause lingering negative economic growth, continued high inflation and declining consumer and business confidence, I will continue to fight for policies that helped to create one of the strongest economies in a generation by building on the successful 2017 tax reform law.
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