By Corinne Murdock |
Democratic Senators Mark Kelly and Kyrsten Sinema will likely support the Biden Administration and Democrats’ $3.5 trillion tax plan, causing Americans to pay more in corporate taxes in Arizona than in China. The bill was derived from President Joe Biden’s Build Back Better Plan, and it would be the largest spending bill in American history.
If the bill passes, the federal-state corporate tax rate in Arizona would jump to over 30 percent, while China’s tax rate would be around 25 percent. That’s not including those enterprises in certain industries supported heavily by the Chinese Communist Party (CCP), which could receive a tax rate as low as 10 to 15 percent. Additionally, the bill would cause capital gains tax in Arizona to rise up over 35 percent, while China’s would ring in around 20 percent. This data was compiled by Americans for Tax Reform.
Back in July, Sinema expressed lack of support for the bill in July over its price tag, but not its content. At that point, Kelly hadn’t made a commitment to the bill either.
“I have also made clear that while I will support beginning this process, I do not support a bill that costs $3.5 trillion,” said Sinema. “And in the coming months, I will work in good faith to develop this legislation with my colleagues and the administration to strengthen Arizona’s economy and help Arizona’s everyday families get ahead.”
However, both Sinema and Kelly voted in favor of the framework for the $3.5 trillion plan last month.
The Biden Administration and Democratic Party’s proposed tax increases would cause the U.S. to have one of the highest capital gains taxes in the world.
Analysts with the Tax Foundation estimated that the impact of this policy would reduce the GDP by about one percent: more than $2 for every $1 in new tax revenue, or about $332 billion of lost output annually. Over the course of a decade, the cumulative GDP would reduce by nearly $1.2 to $1.8 trillion, which they stated would far exceed the amount of revenue the plan would raise in the same amount of time.
All while eliminating an estimated 303,000 full-time jobs. The primary cause for these projected negative changes comes from the proposed corporate tax rate. They estimate that this alone would reduce the GDP by .6 percent and eliminate 107,000 jobs.
As for after-tax incomes, they estimated that individual taxpayers would see an average reduction of $800 each year.
The Tax Foundation’s Senior Policy Analyst, Garrett Watson, assessed that ultimately, low- and middle-income families would feel these repercussions the most.
“The economic harm caused by the tax increases would claw back some of the plan’s expanded tax credits aimed at low- and middle-income families. For those in the bottom 30 percent, it would reduce the average net benefit of the plan per filer from $341 to $233, a 30 percent reduction,” wrote Watson. “Before accounting for economic effects, filers in the middle quintile would see a decrease in average after-tax income of about $38 – mostly due to the corporate tax increases – but that would rise to a $493 drop in average after-tax income every year when including the negative economic effects. The top quintile would see a $1,287 drop in average after-tax income, rising to a $3,861 drop in average after-tax income on a dynamic basis.”
They also noted that these proposed changes would raise a net federal revenue of around $1.1 trillion from next year to 2031, without accounting for dynamic factors like the estimated reduction in economy size. However, that revenue would be reduced by $1 trillion in tax credits. If dynamic factors weren’t excluded, federal revenue would ring in around $804 billion in revenue net of tax credits.
Per a poll released by Navigator Research earlier this week, House Speaker Nancy Pelosi claimed that an overwhelming majority of Americans supported the Build Back Better Act. The results meted out to 66 percent of Americans, 61 percent of independents, and 39 percent of Republicans.