July 28, 2022
The Portman Difference
Senator Portman joined FOX Business’ Kudlow this afternoon to discuss the ramifications of the Democrats’ plan to raise taxes on the wages of workers, consumers and producers. Portman said the Democrats’ tax hikes will hurt low- and middle-income Americans the most and make rising inflation and rising costs even worse. Portman noted that this was the wrong policy at the wrong time, with the US now in recession, with taxes on businesses being passed on to workers and consumers through lower wages and higher prices. Portman specifically criticized the Democrat’s proposed tax on book income, noting that trying to tax companies based on their financial statements instead of their taxable income is the wrong approach that will hurt more industries. like manufacturing, discouraging investment in what equipment manufacturers need to succeed.
You can find the transcript of the interview below and you can also watch the interview here.
SENATOR PORTMAN ON MINIMUM CORPORATION TAX
“Exactly the wrong thing to do now. And, specifically, what it’s going to do is it’s going to hurt workers’ wages, it’s going to hurt consumers by raising prices, both of which are exactly what we shouldn’t be doing at a time of high inflation and low economic growth. . Why? Because wages are no longer keeping up with inflation. That’s the big deal there. And, secondly, with regard to products, we don’t want things to cost more at a time when inflation is already driving their costs too high. So it makes no economic sense. Furthermore, the way the Democrats want to raise these taxes is to use an alternative system of calculating taxes using essentially what they call book income, which means GAAP (General Accounting Principles) income. Generally Accepted). And you understand this better than anybody, Larry, but it’s terrible for the economy because there will be businesses that will resort to this to avoid taxes, which is bad for the economy, bad for economic growth, and exactly what we don’t have to now. in a time of stagflation: low economic growth, below zero and high inflation…
“Well, it couldn’t be worse, in part, because if you look at these numbers that just came out today, they showed that investment is down. And, that includes investing in inventory, it includes investing in the kinds of things that you’re talking about, which would be new plant equipment, facility expansion, all the things that we want to see. This investment was really relatively low in this last quarter, even compared to the economic growth figures. So that’s what has partly driven our low economic growth. So it’s exactly the wrong time to do it. In this show, you will be able to explain to people, I know, because you understand this very well. As bad as that is for workers, it’s bad for consumers, but it’s also bad for our overall economy and our interests in trying to get out of this recession.”
SENATOR PORTMAN ON TAX INCREASE
“Yes, and by the way, on the tax issue, we’re going to get an analysis from the Joint Committee on Taxation, which is a nonpartisan group, that’s going to be very similar to what they gave us last year that says that these tax increases that supposedly fall on corporations, because their book income does not show income, who will pay them? Not the corporation. It passes and will be distributed to shareholders, lower paid employees, lower benefits and, of course, the consumer. So this is, you know, nonpartisan analysis that we’re going to see both from within Congress and from outside experts. So this isn’t just a Republican saying this because I don’t like the Democrats’ tax hike, this is the analysis that we’re going to get from the nonpartisan group, and I think people need to hear that.”
SENATOR PORTMAN ON RECONCILIATION AND INFLATION
“Yeah, to me, that process argument that we shouldn’t have done CHIPS because of the Reconciliation is actually less compelling than the actual substance of what’s in the Reconciliation. I always knew the Democrats would try to do a reconciliation bill. Of course, they’ve said it, and of course, they want to do it, because they can do it without a single Republican vote. I think it is wrong that they are doing it.
“But mostly, I’m concerned about what they’re doing because it’s a terrible policy for the people I represent. And as far as whether we’re in a recession or not, traditionally, as you know better than anybody, what the definition is, is two quarters of negative economic growth, we have that now. But let’s forget that. Let’s talk to the people who are actually suffering in this inflationary time and in this time of relatively low economic growth. It sure feels like a recession for them. They’re being squeezed and, to me, that’s why this policy is so wrong, and I hope we can reverse it, in part by letting the American people know that this is going to make things worse, not better. “
“Well, the type of companies that are going to be hurt the worst, Larry, as you know, are the ones that take that depreciation and take those average costs and that includes the spun off industries. So it would include coal, mining, it would include manufacturing. It also includes financial services because they tend to get a lot of credit that wouldn’t be available under that. After all, just to simplify it, the tax code is written to provide certain tax preferences to encourage certain types of behavior. You can argue whether this is good or not.
“But if you want to change that, go into the tax code and get rid of these things that you think you don’t like. Maybe the Republicans would get rid of the green energy tax credits. Maybe the Democrats would escape the impeachment if it accelerated more. But don’t do that by setting up another tax system and, somehow, avoiding the issue here. So if a company gets a legitimate tax preference, a credit or a deduction, it should certainly be able to keep it. The alternative is that it will hurt some industries much worse than others. And, by the way, extractive industries like coal is one of them, as I understand it, because they are capital intensive.”