Budget & Tax
Ray Carter | August 4, 2022
Lankford, other Republicans warn against tax increase
U.S. Sen. James Lankford and other Republican lawmakers warn that a proposed tax-and-spend package recently unveiled by Democrats, the “Inflation Reduction Act of 2022,” will hammer U.S. manufacturing and cause consumer prices to surge even amidst historic levels of inflation.
“It doesn't lower inflation. It doesn’t lower the deficit,” said Lankford, R-Oklahoma City. “It does punish manufacturing—unless, by the way, you’re doing green energy. If you’re doing green energy, you’re protected. But if you’re producing nails, if you’re producing bolts, if you’re producing baby formula, if you’re producing car parts, if you’re producing lumber, your taxes are all going to go up. If anyone believes that all the prices of all those things—because their taxes go up—is not going to actually impact the consumer, you’re not looking at basic economics. Basic economics says when you tax something more, the price of it is going to go up.”
“Everybody in America knows that when taxes are charged, some people end up carrying the burden of those taxes,” said U.S. Sen. Mike Crapo, R-Idaho.
A summary of the “Inflation Reduction Act of 2022” shows the Democratic proposal will increase tax payments from businesses by $313 billion. It also shows that Democrats believe a significant increase in the size of the Internal Revenue Services (IRS) workforce will generate $124 billion through audits. The legislation calls for spending $369 billion on “Energy Security and Climate Change” and $64 billion on subsidies for those obtaining insurance through Affordable Care Act (“Obamacare”) exchanges.
Lankford and other GOP members of the U.S. Senate Committee on Finance said the bill rolls back important tax reforms enacted in 2017 that encouraged business investment in the United States and fueled strong economic growth during the Trump administration.
“Apparently, the best economy of our lifetime wasn’t a very good thing,” said U.S. Sen. Pat Toomey, R-Penn. “Apparently, narrowing the wage gap between the high-income and lower-income people wasn’t a very good thing. I have yet to hear a Democrat tell us what was wrong with the economy of 2019—that was firing on all cylinders, where wages were growing faster than inflation, not the other way around like we have today—and yet they’ve decided they’ll go after the centerpiece of the tax reform that made that possible.”
“Companies came back to the United States, invested the capital. We got the strongest economy that we have seen in, probably, all of our lifetimes. Employment was up. Wage increases were up. And the inflation rate was less than 2 percent, down around one-and-a-half percent. That’s what was coming out of the effort to get capital formation back into the United States,” Crapo said. “This bill is going to slam it.”
Republicans said the proposal also violates President Joe Biden’s promise, made repeatedly, that he would not support tax increases on anyone earning less than $400,000 annually.
Crapo noted that a Joint Committee on Taxation analysis concluded that the “Inflation Reduction Act of 2022” will, in its first year, increase by $16.7 billion the tax burden of Americans earning less than $200,000 annually.
Over 10 years, the analysis concluded the proposal would increase taxes “for nearly every income category” with half to two-thirds of the burden being placed on individuals and families with $400,000 in income or less.
Crapo said one analysis indicates up to 57 percent of revenue predicted from expanding the IRS workforce will come from individuals and families earning less than $50,000 per year, and as much as 78 percent will come from those earning less than $100,000.
Republican lawmakers noted the ripple effects of higher taxes on businesses negatively impact working families.
“We are in a recession right now,” said U.S. Sen. John Thune, R-South Dakota. “Increased taxes on the people who create jobs means you’re going to have less growth, fewer jobs, and lower wages.”
Lankford also noted the proposal includes new financial burdens on oil-and-gas production in the United States.
“So, while gasoline prices are high, they actually add another fee on that to be able to raise the price of gasoline again,” Lankford said.
He noted natural-gas prices are expected to surge 17 percent if the bill becomes law.
And, Lankford noted, the legislation’s provisions on prescription drugs involve generating “savings” from Medicare and shifting those funds to subsidies for Affordable Care Act insurance subsidies.
“This bill takes money from 76-year-olds and moves it to 26-year-olds to be able to subsidize their health care instead,” Lankford said.
The data presented by Republican lawmakers contrasts dramatically with the picture painted by Democratic lawmakers.
In a recent release, Senate Majority Leader Chuck Schumer, D-New York, declared the “Inflation Reduction Act of 2022” will “mark a turning point in our nation’s commitment to protect our planet for our children and our grandchildren” and represents “a strong stride towards climate justice for communities long left behind, especially communities of color.”
Director, Center for Independent Journalism
Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.