Commentary: Biden’s spending, tax plans will hamper American growth and competitiveness

After more than a year of job losses, shuttered businesses and a limping economy, America is getting back on track. Shutdowns have lifted, businesses are open, and we are returning to our normal way of life. With just a few weeks to go before we celebrate Independence Day, Americans are fired up and ready to get back to business.  

Except under President Joe Biden’s tax and spending plans, the cost of doing business in America would skyrocket. And every American family is being impacted — prices for food, gas, and energy have increased at the fastest rate since 1992. That Fourth of July barbecue or weekend trip could cost you 5% more than usual — hitting you at the gas pump, the grocery store and your energy bills.  

Recent data from the U.S. Bureau of Labor Statistics cites a record high of 9.3 million job openings as of April. Despite millions of job openings, a record 48% of small businesses  in April couldn’t find Americans to fill their open positions. “Generous unemployment benefits and stimulus funds have prevented workers from re-entering the labor force,” said economist Katherine Judge of CIBC World Markets. While the government spends trillions of our tax dollars to keep people home, businesses are struggling to hire employees. “When I went to the store across the street to buy a help wanted sign, they had sold out,” said one Long Beach, California restaurant and bar owner. 

The trillions in spending by the federal government in support of pandemic aid is estimated to cost $150,000 for every child born today,  wrote economist Stephen Moore. As a mother and a grandmother, I can’t fathom leaving future generations with this type of unsustainable cost. However, under President Biden’s $6 trillion budget for the  federal government, released last month, the national debt will skyrocket to its highest since World War II .  

Before the pandemic, the tax cuts in the 2017 Tax Cuts and Jobs Act helped usher in the lowest unemployment numbers in more than 50 years. Biden’s budget would undo the gains from those tax cuts and cost the economy hundreds of thousands of jobs and wage losses. This proposed spending has a cost, and it is hard-working Americans who will pay the price.  

Under the Biden plan, the corporate tax rate would increase to as high as 28%, making America’s corporate tax rate higher than Communist China’s. This increase would raise the U.S. federal-state combined tax rate to 32.34%, which is higher than every country in the OECD and the G7. How can American business and innovation compete on the global stage when our stage is the most expensive place to do business? 

“The funding choices in the American Families Plan come at the cost of reduced economic output, fewer jobs, and lower wages,” wrote analysts with the nonpartisan think tank Tax Foundation. By raising the corporate tax rate, the U.S. would see reduced GDP by about $1,650 per household. Studies have also shown that American workers would bear between 50% and 100% of the burden of the corporate tax hike — a mind-boggling amount when you consider how many people and businesses are trying to recover from the economic downturn brought on by the pandemic. Make no mistake, this would hurt American competitiveness and could cost more than 1 million U.S. jobs, according to the National Assn. of Manufacturers. 

In addition to the corporate increase, the administration’s proposed retroactive capital gains tax increase has caused heads to spin. Capital gains taxes apply to assets such as real estate. The housing market is booming, but under President Biden’s plan, for some Americans it just got more expensive to sell their homes. Raising capital gains taxes won’t just hurt homeowners.  According to the U.S. Chamber of Commerce “a higher rate, immediately upon enactment, reduces the value of all stocks. That means everyone saving for retirement, or anyone who has already retired, will see the value of their 401Ks fall.” 

The last thing hardworking Americans want is to owe more of their paychecks to the federal government. The number of Californians filing unemployment the week that ended June 12 made up 17% of all nationwide claims — a stark reminder of what happens when taxes and the cost of doing business are too high.      

We are ready to get back to work, get back to business and get back to our normal way of life.  

And it’s time for the government to get out of the way.  

U.S. Rep. Michelle Steel is serving her first term in Congress, representing California’s 48th congressional district. Before coming to Congress she was a member of the California Board of Equalization, the state’s tax agency, and Chair of the Orange County Board of Supervisors.

Support our coverage by becoming a digital subscriber.