The U.S. economy added just 235,000 jobs in August. This is a far cry from estimates which predicted the economy would add 720,000 jobs. The US is still 5.2 million jobs short from its pre-pandemic employment.
8.4 million Americans are still out of work and millions of Americans are still underemployed. About 4.5 million workers are employed part-time for economic reasons, meaning they would prefer to work full-time, but cannot gain the hours needed to do so.
Not only has job growth been disappointing under the Biden administration, but inflation has been surging as well. Consumer prices increased by 5.4 percent on an annualized basis in July, according to the Bureau of Labor Statistics (BLS). In January 2021, before Joe Biden took over the presidency, annual inflation was at a stable 1.4 percent. If wages cannot keep up with inflation, purchasing power will continue to erode.
Given the economy remains weak, now is not the right time to impose Biden’s multi-trillion tax hike on small businesses, working families, and investment.
- Biden’s tax hikes would eliminate one million jobs in the first two years and would eliminate 600,000 jobs per year over the first decade, according to a study by economists John W. Diamond and George R. Zodrow.
- President Biden and congressional Democrats want to raise the corporate rate to 28 percent, higher than communist China’s 25 percent rate. A corporate tax hike would be borne by workers and consumers. As noted by Stephen Entin of the Tax Foundation, workers bear nearly 70 percent of the cost of a corporate tax through lower wages and fewer jobs. Further, a 2020 study by the National Bureau of Economic Research found that 31% of the corporate tax falls on consumers. This tax hike would hit many small businesses as well. Over one million C-corporations are classified as small businesses, defined by the Small Business Administration as any independent business with fewer than 500 employees.
- President Biden and congressional Democrats want to double the capital gains rate, making the average top capital gains rate 48.8 percent after state taxes. This tax hike will threaten business creation, business expansion, entrepreneurship, retirement savings, and jobs and wages.
- Democrats are also proposing the creation of a second Death Tax by repealing step-up in basis. This will impose the capital gains tax (which Biden has proposed raising to 43.4 percent) on the unrealized gains of every asset owned by a taxpayer when they die and will be imposed in addition to the existing 40 percent Death Tax. It will force predominantly family-owned businesses to downsize and liquidate assets, leading to fewer jobs, lower wages, and reduced GDP. In fact, 78 percent of small business owners say that Democrats’ repeal of step-up in basis would have crippling consequences for small businesses.
- Democrats have pushed for increasing the top income tax rate to 39.6 percent. This tax increase will hit small business that are organized as sole proprietorships, LLCs, partnerships and S-corporations. These “pass-through” entities pay taxes through the individual side of the tax code. Of the 26 million businesses in 2014, 95 percent were pass-throughs. Pass-through businesses also account for 55.2 percent, or 65.7 million of all private sector workers. More than half of all pass-through income would be taxed at this new, higher rate.
Today’s disappointing jobs report shows that we still have a long way to go to fully recover from the economic damage the pandemic caused. With the U.S. economy still 5.2 millionjobs short from pre-pandemic level, now is an especially bad time to impose $3.5 trillion in job-killing, growth-killing tax hikes.