West Virginia Democratic Senator Joe Manchin surprised his colleagues, and incensed Republicans, this weekend with the revelation of his agreement to a new repackaged and renamed Build Back Better-lite bill. Manchin and Senate Majority Leader Chuck Schumer came together after weeks of butting-heads over the bizarrely named ‘Inflation Reduction Act.’
The bill is expected to raise an estimated $313 billion over a decade while allegedly not raising taxes on everyday Americans. This would be good given that the president and democrats have promised not to raise taxes on those of us who make less than $400,000.
The Schumer-Manchin bill (the “Inflation Reduction Act”) would increase taxes by over $16.7 billion in 2023 for households with income under $200,000.
(Source: Joint Committee on Taxation.) pic.twitter.com/7U9frOMpKZ
— Michael R. Strain (@MichaelRStrain) August 1, 2022
However, data indicates that taxes will rise for everyday Americans like you and me. No matter how hard Senator Manchin and the White House try to deny it, it’s hard not to look at the numbers and scratch your head.
A Lesson in Economics
I’ll give it to the White House and Capitol Hill; economics can be boring, but it’s super important if you are going to be an effective policymaker.
Data from the nonpartisan Joint Committee on Taxation found that this bill would increase taxes by over $16.7 billion in 2023 for those who make less than $200,000. Economists who get paid a fair amount of money to do the tedious work of economic analysis assume that companies will pass part of their 15% tax increase in this bill down to employees.
This data goes counter to Manchin’s assertion that this wouldn’t raise taxes at all, as he has tried to reassure folks during recent media outings.
HARRIS: "Are you saying that Mitch McConnell and others in the Senate are wrong…that Americans' taxes are not going to go up…?"
MANCHIN: "Totally wrong. Totally, absolutely wrong. Totally wrong." pic.twitter.com/FEKS6DBBtm
— Townhall.com (@townhallcom) August 2, 2022
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This passage will be in the form of reducing after-tax wages and job opportunities. As William McBride, vice president of Federal Tax and Economic Policy at the Tax Foundation explained,“You have to distribute the corporate tax burden to somebody.”
McBride continues to point out that “it falls on a mixture of [stock] owners and workers and those are all over the income scale.” This statement rings true, and economists argue that shareholders will most definitely take a hit with this bill due to stock holdings decreasing to include those in pension plans.
Still, some argue that these economists and tax experts are wrong.
Talk About a ‘Gotcha Kind of Thing’
A spokesperson for Senate Finance Chair Ron Wyden said families “will not pay one penny in additional taxes under this bill.” The spokesperson went on to say that the projection, “doesn’t include the benefits to middle-class families of making health insurance premiums and prescription drugs more affordable. The same goes for clean energy incentives for families.”
Steve Rosenthal, a senior fellow at the nonpartisan Tax Policy Center, adds that the projections are “more of a gotcha kind of thing,” stating as proof that the president and democrats promised not to raise taxes on Americans earning below $400,000 directly.
Given that the bill includes $369 billion for energy and climate initiatives, I’d say the bill was most definitely a ‘gotcha’ but not in the way Mr. Rosenthal meant. I have to tell you, this $369 billion stinks… literally.
Electric Cars and Cow Farts
Part of the $369 billion in this bill is allocated to address “enteric methane emissions from ruminants.” What does that mean exactly?
To translate, it means the intestinal methane emissions from animals such as cattle.
Let’s take a trip down memory lane to a document from Democratic representative Alexandria Ocasio Cortez’s office that was later retracted that said,“We set a goal to get to net-zero, rather than zero emissions, in ten years because we aren’t sure that we’ll be able to get fully rid of farting cows and airplanes that fast.”
This document concerned the Green New Deal, so I suppose AOC and her cow fart-hating compatriots got what they wanted, at least in part. As communications director Patrick Creamer for the republicans of the Senate Committee on Agriculture, Nutrition, and Forestry said of this bill that, “Americans are struggling with high prices at every turn – the grocery store, the gas pump, even at home with utilities – and yet Senate Democrats want them to pay billions for green new deal programs that were roundly rejected when they were first proposed.”
He’s not wrong. This bill also proposed a $7,500 tax credit for Americans who buy new electric vehicles.
Try to Explain This Back Home
Senator Manchin famously said about Build Back Better that “If I can’t go home and explain it, I can’t vote for it.”
So, I’m curious how the Senator will explain backing this bill that imposes a tax increase of 7.2% on the coal industry, higher than any other industry, given that his state is the second largest coal producer in the country.
West Virginia Republican representative Alex Mooney scolded Senator Manchin, saying that “Senator Manchin is raising taxes on West Virginia’s coal mining industry and providing subsidies to liberals in deep blue states to drive electric vehicles.”
The second hardest hit industry in the bill is the automobile and truck manufacturing industry, with a 5.1% increase. What an interesting coincidence.
Related: Democrats Reach Deal To Raise Taxes By Nearly $750 Billion
Even the Wall Street Journal trashed the bill on its editorial board, calling it the ‘Business Investment Reduction and Distortion Act.’
A Lone Holdout?
Now all eyes are on Democrat Senator Kyrsten Sinema from Arizona. Will she stop this bill, or will she fold like her ‘moderate’ friend Senator Manchin?
It’s hard to say. A spokesperson for Senator Sinema said she will wait to “review the text and will need to see what comes out of the parliamentarian process.”
This could be your moment, Senator Sinema. Who knows, maybe deep down inside, Senator Manchin is hoping it will be her moment too
Related: Biden Treasury Sec. Yellen Claims Economy Is In New Phase of ‘Recovery’
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