July 28, 2022
The Portman Difference
Senator Portman joined FOX Business’ Kudlow this afternoon to discuss the consequences of the Democrats’ plan to raise taxes on workers’ wages, consumers, and producers. Portman said the Democrats’ tax hikes will hurt lower and middle-income Americans the most and will make soaring inflation and rising costs even worse. Portman noted that this was the wrong policy at the wrong time, with the US now in recession, with taxes on businesses getting passed onto workers and consumers through lower wages and higher prices. Portman especially criticized the Democrat’s proposed tax on book income, noting that attempting to tax companies based on their financial statements instead of their taxable income is the wrong approach that will hurt industries like manufacturing the most, discouraging investments in the equipment manufacturers need to succeed.
A transcript of the interview can be found below and you can also watch the interview here.
SENATOR PORTMAN ON THE CORPORATE MINIMUM TAX
“Exactly the wrong thing to do right now. And, very specifically, what it’ll do is it will hurt workers’ wages, it will hurt consumers by raising prices, both of which are exactly what we shouldn’t be doing at a time of high inflation and low economic growth. Why? Because wages aren’t keeping up with inflation already. That’s the big issue out there. And, second, with regard to products, we don’t want things to cost more at a time when inflation is already driving their costs up way too high. So, it makes no economic sense. On top of that, the way in which the Democrats want to raise these taxes is using an alternative tax calculation system using essentially what they call book income, meaning GAAP (Generally Accepted Accounting Principles) income. And you understand this better than anybody, Larry, but that’s terrible for the economy because it will have businesses actually managing towards that to avoid taxation which is bad for the economy, bad for economic growth, and precisely what we shouldn’t be doing right now at a time of stagflation: low economic growth, below zero, and high inflation…
“Well, it couldn’t be worse, in part, because if you look at these numbers that just came out today, it indicated that investment is down. And, that includes inventory investment, it includes investment in the kinds of things that you’re talking about which would be new plant equipment, expanding facilities, all the things that we want to see. That investment was actually relatively low in this last quarter, even as compared to the economic growth numbers. So, that’s what drove our low economic growth, in part. So, it’s exactly the wrong time to do that. On this show, you’ll be able to explain to people, I know, because you understand this so well. How this is negative for workers, it’s negative for consumers, but it’s also bad for our overall economy and our interests in trying to climb out of this recession.”
SENATOR PORTMAN ON TAX HIKES
“Yeah and by the way, with regard to the tax issue, we’re going to get an analysis from the Joint Committee on Taxation, which is a nonpartisan group, that will be very similar to what they gave us last year which says that these tax increases that supposedly fall on corporations, because under their book income they don’t show income, those will be paid by who? Not the corporation. It gets passed along and will be distributed to the shareholders, to the employees with lower wages, lower benefits, and, of course, to the consumer. So, that’s the, you know, nonpartisan analysis that we will see both within the Congress and from outside experts. So, this is not just a Republican saying this because I don’t like Democrat tax increases, this is the analysis that we’re going to get from the nonpartisan group, and I think people need to hear that.”
SENATOR PORTMAN ON RECONCILIATION AND INFLATION
“Yeah, to me, that process argument that we shouldn’t have done CHIPS because of the Reconciliation is actually less compelling than the actual substance of what’s in Reconciliation. I always knew the Democrats were going to try to do a reconciliation bill. Of course, they’ve been saying that and of course, they want to do that, because they can do it without a single Republican vote. I think it’s wrong that they’re doing it.
“But, mostly, I’m concerned about what they’re doing because it’s a terrible policy for the people I represent. And, in terms of whether we’re in a recession or not, traditionally, as you know better than anybody, what the definition is, is two quarters of negative economic growth, we have that now. But let’s forget that. Let’s talk to people who are actually suffering through this inflationary time and through this relatively low economic growth time. It certainly feels like a recession to them. They’re getting squeezed and, to me, that’s why this policy is so wrong headed and my hope is we can turn it around, in part by letting the American people know that this is going to make things worse, not better.”
“Well, the kind of companies that’ll be hurt the worst, Larry, as you know, are ones that do take that depreciation and do take that median expensing and that includes extracted industries. So, it would include coal, mining, it would include manufacturing. It also includes financial services because they tend to take a lot of credits that would not be available under this. Bottom line is, just to try to simplify it, the tax code is written to provide certain tax preferences to incentivize certain kinds of behavior. You can argue whether that’s good or not.
But, if you want to change that, go into the tax code and get rid of these things that you think you don’t like. Maybe Republicans would get rid of green energy tax credits. Maybe Democrats would get rid of depreciation if it’s more accelerated. But, don’t do it by setting up a whole other tax system and, sort of, avoiding the issue here. So, if a company takes a legitimate tax preference, a credit, or a deduction, they should certainly be able to keep it. The alternative is it’s going to hurt some industries a lot worse than others. And, by the way, extractive industries like coal is one of them, as I understand it, because they’re capital intensive.”