Larry Kudlow: Schumer reconciliation bill will stifle business investment growth

Save America. Hit the bill Bill, of course, is Schumer-Munchin Reconciliation Bill, It won’t be easy to eliminate, but we will continue to do our best based on policy.

The more we learn about this bill, the less people will like it. According to the Penn-Wharton budget model, the “Inflation Reduction Act” does not reduce inflation much.

It is not a supply-side model, but its results show that the effect on inflation is statistically indistinguishable from zero. All I want to say is that there is no automatic correlation between the budget deficit and inflation anyway. So, I never bought that argument to begin with.

The main cause of inflation is excessive easy money and in this current cycle, excessive federal spending has also contributed, but one of the killers of the economy with skyrocketing inflation is Biden’s regulatory throttling of the economy starting from fossil fuels, But almost all businesses and industries continue.

British businessmen have severed ties with China over rising political tensions.

President Biden Speech

President Joe Biden addresses the 76th session of the United Nations General Assembly on September 21, 2021 in New York City. (Photo by Timothy A. Clary-Pool/Getty Images/Getty Images)

Biden slapped on regulatory costs of $200 billion in his first year alone. This is more important than some of the spurious accounting gimmicks designed to reduce the budget deficit for a few years.

If you take a look at the reconciliation, there’s a $739 billion tax increase and $433 billion in spending, but Obamacare spending is only for three years. That would be over $200 billion in 10 years, eliminating about $150 billion in so-called deficit reduction and the idea that we’re going to give another $80 billion to the IRS, which would generate another $124 billion in tax revenue, That game is tried over and over again, and it fails over and over again, and it’s just more fake baloney.

In addition, energy loans and loan guarantees are scored to generate a lot of money as interest-paying assets. good luck with him. Remember Solindra? Or how did those student loans work out? But the biggest blow is that the loss-making crowd forgot to add in the $280 billion Chips+ bill that didn’t pay off.

I’m sure it’s just a blunder, but suddenly when you tally up Congress’s actions last week, there’s about $900 billion in spending against $740 billion in revenue, which sounds like a deficit to me.

Please feel free to check my math, but more important is the overall idea that 100% of business investment expenses are a tax loophole. This. The reason why taxable income is less than book income for corporations is that you are deducted by law, with the intention, in the 2017 Trump tax deduction, to allow for an immediate bonus deduction for new plants, equipment, technology, etc. .

This was done to make America more competitive, to increase productivity and real wages, and to reduce the tax rate from 35% to 21% along with specific family income on purpose.

Democrats show non-partisan analysis inflation bill raises taxes

They were the twin pillars of the supply-side business tax deduction and it worked. Average income increased. Unemployment collapsed. Poverty fell. Inequality fell and there was no inflation and the pandemic was abstracted from the shutdown, it paid for itself as the Laffer curve kicked in.

The Schumer reconciliation bill would halt the growth of business investment. big mistake ! And, because 70% of the corporate tax burden is borne by blue-collar working people, imposing an alternate minimum tax of 15% on book income would increase taxes across the board.

According to the Joint Committee on Taxation, which is no friend of the supply-sides, 50% of the minimum tax burden will fall on manufacturers. By the way, today’s ISM report for manufacturing fell to its lowest level since June 2020, but then, to varying degrees, taxed every other industry, including a 7.2% tax increase on coal and a $25 billion tax increase on oil. will face growth. , and fossil fuels in general for that matter and—get this—there’s a carving out for the Green New Deal tax credit. It’s a shock!

There is also a carving out for refundable tax credits on semiconductors, though the chip industry will be hit hard by the 15% minimum corporate tax. He who gives one hand, takes the other hand.

Some other news again from the Joint Committee on Taxation: Those earning less than $10,000 a year will be hit hardest with a 3.1% tax increase. People between $20,000 and $30,000 will have a 1.1% tax increase. Those making less than $100k would get a $6 billion tax increase. There would be a $17 billion tax increase on people earning less than $200k a year.

So pretty much everyone gets a tax increase. What a pleasure! Just like Christmas in August. Awesome stuff.

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Here’s a multiple choice question: Will this tax increase Economy A) Growthier, or B) More bearish? If you answered B, you win the lottery. Next question: Will the roughly $900 billion in additional spending generate: a) high inflation, or b) low inflation? If you answered B, you also win the lottery.

But after tax, after-inflation On premise, lotteries aren’t worth what they used to be. For heaven’s sake, save America, kill Bill.

This article is adapted from Larry Kudlow’s opening remarks on the August 1, 2022, edition of “Kudlow.”

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