July 28, 2022
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The Portman Variation
Senator Portman joined FOX Business Kudlow. This afternoon to discuss the consequences of Democrats’ plan to raise taxes on workers’ wages, consumers and producers. Portman said the Democrats’ tax hikes would hurt low- and middle-income Americans the most and would exacerbate inflation and rising costs. Portman says this is the wrong policy at the wrong time, with America now in a recession, with taxes on businesses being passed on to workers and consumers through lower wages and prices. Portman specifically criticized the Democrats’ proposed tax on book income, saying that trying to tax companies based on their financial statements rather than their taxable income is a misguided approach that would hurt industries like manufacturing and encourage investments in equipment that manufacturers need to succeed.
A transcript of the interview can be found below and you can also watch the interview. over here.
Senator Portman on the corporate minimum tax
“It’s the wrong thing to do right now. And, specifically, what it does is it hurts workers’ wages, it hurts consumers by raising prices, both of which we really shouldn’t be doing in a time of high inflation and low economic growth. Why? Because wages don’t keep pace with inflation.” . That’s the big issue there. And, secondly, when it comes to products, we don’t want things to cost more at a time when inflation is driving up their costs so much. So it doesn’t make any economic sense. And the way Democrats want to raise these taxes is the alternative tax calculation, which they call book income. Using a system that means GAAP (Generally Accepted Accounting Principles) income. And you understand this better than anyone, Larry, but that’s bad for the economy because it’s bad for the economy, bad for economic growth, and you’re going to have businesses that are mismanaged to avoid taxes, which we really shouldn’t be doing right now. Inflation Period: Low economic growth, sub-zero and high inflation…
“Well, it can’t be worse in part, because if you look at these numbers that came out today, it shows that investment is down. And, that includes investment in inventory, investment in the kinds of things that you’re talking about, which is new plant equipment, expansion facilities, all the things that we want to see. This investment was low compared to economic growth numbers in the previous quarter. So this is what drives our low economic growth. So, the right time to do that is not right. On this show, you understand this so well that you can explain it to people, I know. It’s negative for workers, it’s negative for consumers, but it’s also bad for our overall economy and trying to get out of this recession.
Senator Portman on the tax increase
“Yes, and by the way, on the tax issue, we’re going to get a nonpartisan analysis from the Joint Committee on Taxation, which is going to be the same as what they gave us last year. These tax increases that are supposed to fall on corporations, because they don’t show income under their books, who’s going to pay for those? Not the corporation. It goes along and is distributed to shareholders, low-wage workers, low-income workers, and of course the consumer. So that’s the nonpartisan analysis that we see in Congress and outside experts. So it’s not just a Republican representative because I don’t like a Democrat tax increase, it’s an analysis that we get from a nonpartisan group. And I think people need to hear that.
Senator Portman on reconciliation and inflation
“Yes, to me, the procedural argument that we shouldn’t have done CHIPS because of the Reconciliation Table is actually less compelling than the actual content of the Reconciliation Table. I always knew the Democrats were going to try to pass reconciliation legislation. Of course they’ve been saying that and they really want to do that, because they can do it without one Republican vote. I think what you are doing is wrong.
But, mostly, I’m concerned about what they’re doing because it’s terrible policy for the people I represent. And, we’re in a recession, traditionally, as you know better than anybody, what that means is two-quarters of negative economic growth, now we have that. But let’s forget that. Let’s talk about the people who are suffering in this period of inflation and relatively low economic growth. It certainly feels like a failure to them. They are being squeezed and to me that is why this policy is the wrong approach and my hope is that we can reverse it.
“Well, the companies that are going to be hit the hardest, as you know Larry, are the ones that take that cost reduction and that take that average cost and that includes the manufactured industries. Therefore, coal, mining, production increases. It also includes financial services as they take many credits which are not available under this. The bottom line, just trying to simplify it, is that the tax code is written to encourage certain behaviors to provide certain tax preferences. You can argue whether that’s good or not.
But if you want to change that, go into the tax code and remove these things you don’t like. Maybe the Republicans will eliminate the green energy tax credits. Maybe the Democrats will get rid of the rate cut if it accelerates further. However, don’t do it by setting up a whole other tax system and avoiding the issue here. Therefore, if a company takes a legitimate tax option, credit or deduction, they should definitely be able to keep it. The alternative will hurt some industries more than others. By the way, it’s one of the manufacturing industries like coal, as I understand it, because they’re capital intensive.
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