Former Vice President Mike Pence argued in an opinion piece for Fox News on Monday, tax day, that if President Joe Biden’s sock-it-to-American-job-creators tax plan were put in place, it would be a boon to China.
He’s right.
“Under the Trump-Pence administration, we proved that low taxes are the key to creating prosperity for Americans of every background and income group,” Pence wrote.
The passage of the Tax Cuts and Jobs Act in December 2017 was the key.
“Within months, our economy took off like a rocket,” Pence recounted. “America gained more than 7 million new jobs, unemployment plummeted to the lowest rate in 50 years, and more than 10 million people were lifted off of welfare — the largest reduction in poverty in modern history.”
As the old adage goes: “The best anti-poverty program is a job.”
Mike Pence: Biden’s China-first tax plan – Americans come last in president’s jobs plan | Fox News https://t.co/Y3oDO6lpfz
— Mike Pence (@Mike_Pence) May 17, 2021
“Cutting taxes on American employers was a central part of our efforts to bring jobs and factories back home to the United States — and it worked,” Pence explained.
“After losing 60,000 factories under the previous two administrations, America gained 12,000 new factories, because employers were no longer driven away by an exorbitant tax burden.”
One of the central components of the Trump tax cuts was cutting the corporate tax rate from 35 percent — the highest in the industrialized world — to 21 percent, more toward the middle.
Prior to the cuts, the combined federal and state effective tax rate averaged 37.5 percent, which dropped to 24.6 percent in 2019, according to the nonpartisan Tax Foundation.
Under Biden’s plan, the combined rate would go from slightly below China’s 25 percent to well above it at 32.34 percent.
Whether we use corporate tax collections as a portion of GDP, average effective tax rates, or marginal tax rates, each measure shows that the U.S. effective corporate tax burden is close to or above the average compared to its OECD peers: https://t.co/EQ6GrJk52w pic.twitter.com/ymLFxJMEur
— Tax Foundation (@TaxFoundation) April 27, 2021
In addition to raising corporate tax rates, Biden reportedly wants to increase capital gains taxes significantly.
The Wall Street Journal editorial board reported the top capital gains tax would go from 23.8 percent to 43.4 percent.
The capital gains tax is a tax on investments, so this policy would be a disincentive to invest, which is what allows businesses to grow and to create jobs.
As with corporate taxes, states also tax capital gains, meaning several of them, including California, New York and New Jersey, would have a combined rate of over 50 percent, according to the Tax Foundation.
Under President Biden’s tax plan, 13 states and D.C. would have a top combined capital gains tax rate at or above 50%:
56.7% CA
54.3% NY
54.2% NJ
53.3% OR
53.3% MN
52.4% DC
52.2% VT
50.7% HI
50.6% ME
50.4% CT
50.3% ID
50.2% NE
50.2% MT
50.0% DE(58.2% NYC)
(57.3% Portland, OR) pic.twitter.com/GfWgBZhlbs— Tax Foundation (@TaxFoundation) April 23, 2021
“Job growth will trickle to a standstill,” Pence said would happen under Biden’s approach. “Capital investments will be canceled. Fewer products will be Made in the USA. Manufacturers will pack up and head overseas, leaving a hole in the heart of blue-collar communities.”
“Worse yet, China stands to become one of the biggest beneficiaries of the Biden tax hikes,” he added.
With former President Donald Trump’s pro-growth tax and regulatory policies still in place, the economy rebounded strongly following the COVID shutdowns of last spring.
Prior to the COVID-19 shutdowns, the U.S. was experiencing some of its best economic numbers in a long time, including a 3.5 percent unemployment rate, the best since 1969.
In March, the unemployment rate fell to 6 percent from a peak of 14.8 percent in April 2020.
It ticked back up to 6.1 percent last month, with 266,000 jobs added, well short of the nearly one million that some economists anticipated as COVID restrictions continued to lift.
The disappointing number came after Democrats passed and Biden signed into law the $1.9 trillion American Rescue Plan Act in March, which increased taxes by $60 billion and extended the enhanced unemployment benefits, set to expire that month, until September.
At least both of these moves are relatively minor in size and scope.
If Biden and the Democrats manage to push through drastically increasing taxes on corporations and investments, it would be disastrous.
“After four years of America First tax and trade policy, our foreign competitors would gladly welcome the self-imposed competitive disadvantage,” Pence concluded.
“China stands to gain thousands of jobs as employers flee the crushing tax and regulatory burden of Joe Biden’s America.”
This article appeared originally on The Western Journal.
