Madam President, I yield myself 30 minutes from the bill time. Madam President, I would like to start my remarks by going back to nearly the very beginning of this Congress, when we were debating what was called the American Rescue Plan.…
Madam President, I yield myself 30 minutes from the bill time.
Madam President, I would like to start my remarks by going back to nearly the very beginning of this Congress, when we were debating what was called the American Rescue Plan. We were told then by our colleagues on the other side that this was going to save the country: $1.9 trillion of debt-financed spending, they said, was going to fix everybody's concerns in the United States.
Where are we today?
A 9.1-percent consumer price inflation, which we told them was coming; gas prices doubling; economic stagnation; GDP contracted by nine-tenths of a percent in the second quarter.
We are now arguing over semantics about what is a recession.
Sixty-five percent of the people in this country think we are already in a recession, and more than 80 percent of the country think our economy is on the wrong track.
The nonpartisan Penn Wharton Budget Model has made a comment about what we are looking at today, but what are we being told today? Another rescue plan, only this time they call it the Inflation Reduction Act. The Penn Wharton Budget Model says this bill will, if anything, raise inflation in the first few years of this budget, with a small and significant negative effect later in this decade. That same model concludes that there is ``low confidence that the legislation will have any impact on inflation.''
But it does have an impact on all of us and our economy. It does nothing to bring the economy out of stagnation and recession, but rather the Inflation Reduction Act of 2022 gives us higher taxes, more spending, higher prices, and an army of IRS agents.
Let's talk about the taxes first.
Hundreds of billions of dollars are raised through taxes, around 350 to 400 billion.
There is a new book minimum tax on corporations. There is a new tax on stock buybacks. There is, believe this or not, a new tax on gasoline--on oil and gas production and refineries--at the very time when our President has shut down production of oil and gas on our interior and offshore and has stopped the Keystone XL Pipeline, basically freezing America's production and driving us from a state of energy independence to a state of energy dependence, where we have to ask our friends and often our enemies across the globe to increase their gas production to help us deal with our prices at the pump.
And this book minimum tax, everybody in America knows that corporations don't bear the burden of the taxes we put on them. Who does? Workers, consumers, and owners.
A recent National Bureau of Economic Research study estimates that 31 percent of these taxes will be borne by consumers via price hikes-- price hikes at a time when we are dealing with record inflation.
Thirty-eight percent is borne by workers by way of lower wages or less employment, and 31 percent is borne by owners.
Now, my colleagues are very quick to say: Well, this is just rich people and rich companies that are tax cheaters.
The owners of the corporations, though, are primarily people in America who have retired and are leaning on a pension or who have not yet retired or are trying to save money for their retirement by putting their money into 401(k) programs or other investment programs. That is who bears the burden of these taxes.
We just asked the Joint Tax Committee to tell us who bears these burdens? Who will bear the burden of these tax hikes?
They told us, as the chart here shows, in 2023, that taxes will be increased by $16.7 billion on American taxpayers earning less than $200,000. In 2023, another 14.1 billion will come from taxpayers earning between $200,000 and $500,000. And by 2031, when the new green energy credits and subsidies provide an even greater benefit to those in America with higher incomes, those earning below $400,000 are projected to bear as much as two-thirds of the burden of the additional tax revenues collected in that year.
That is what we are being offered as a solution to the crisis that we are now in in our economy.
And as I will discuss later, the nonpartisan Congressional Budget Office has recently confirmed that a significant portion of the revenue that the IRS supersized funding they are claiming will be coming from audits that they are going to be taking will come out of taxpayers earning less than $400,000.
So in response to this data that we have been able to show about their very tax proposals in this bill, the Democrats, surprisingly, have claimed that this Joint Tax Committee analysis isn't valid because it didn't include the effects of their spending that they were putting into the bill.
Now, that is a novel idea. It is OK to raise taxes, and it is OK to put more tax burden on people making more than $400,000 because we are going to be sending some subsidies to some of them.
So we asked the Joint Tax Commission to include those subsidies in its analysis, which they did.
The analysis they gave us back incorporated the ObamaCare subsidies and shows that the burdens of the proposed tax increases in the Democrats' reckless bill will be so substantial and so widespread throughout all income categories--I repeat, all income categories--that no amount of temporary healthcare credits or even the subsidies that this bill gives for $80,000 luxury SUVs will overcome the tax increase burdens that will be overwhelmingly felt by lower and middle-income- class Americans.
Few, if any, Americans will get a net reduction in the burden that they will bear from the taxes and subsidies provided in this bill. And for any that do, it will only be temporary. The vast majority will still bear the burden of these taxes.
The book minimum tax does not close loopholes. You often hear that from my colleagues on the other side as well. It raises taxes on U.S. companies by hundreds of billions of dollars, and it would not prevent all companies from paying zero tax. Instead, it would let some of the companies preferred by the Democrats continue to avoid their
taxes by using not loopholes but legitimate provisions for research and development tax credits and other kinds of tax credits that are intended to incentivize the conduct of those companies.
The Joint Tax Committee has already estimated that half of the burden of the book minimum tax will fall on manufacturers.
In other words--well, let me go into what 252 trade associations and chambers of commerce from across the country said when they realized that close to half of this burden will fall on manufacturers.
This is from those trade associations that jointly--252 of them-- wrote to Congress:
Enacting the proposed Corporate Book Minimum Tax would be
the antithesis of sound tax policy and administration. Its
introduction would be neither simple nor administrable and
would pose a competitive disadvantage to U.S.-headquartered
businesses while increasing the incidence of unrelieved
double taxation. It would also have a detrimental effect on
the quality of financial reporting.
The Business Roundtable said:
[T]he proposed book minimum tax would, among other things,
suppress domestic investment--
Remember that, ``suppress domestic investment''--
when increased investment is needed to spur a strong
recovery in our economy. This tax hike would also undermine
the competitiveness of America's exporters.
Even with a carve-out for accelerated appreciation, there remain many unresolved problems with the design and structure of this minimum tax that make it a poor revenue option.
So let's go to the next one that they raise: stock buybacks.
Once again, my colleagues on the other side are quick to attack any company that does a stock buyback, saying that they are just trying to make owners of their stock who are rich tax cheaters even more wealthy.
I have already explained that the owners of that stock are the vast majority of Americans who are retired or who are working for retirement or who are trying to invest a little bit to try to get ahead.
Despite the claims that these are loopholes, they are doubling down on proposing a $74 billion tax on U.S. companies. Democrats want to create a third layer of tax on American companies, which will have the harshest impact on seniors and other savers.
The Wall Street Journal in a recent editorial explained:
Companies use buybacks to return cash to shareholders for
which they don't have a better use. Shareholders who sell
shares back to . . . [companies] can invest the proceeds
elsewhere. That beats letting the cash sit on corporate books
earning interest while CEOs get complacent or decide to buy a
business they don't really want or understand how to run.
Buybacks aren't tax free: Owners who sell shares back to
the company realize a taxable gain. Any boost in the share
price contributes to a higher taxable gain for remaining
owners when they sell their shares in the future.
Why not pay dividends instead? Companies and shareholders
might prefer buybacks in some instances, such as the company
is disbursing a one-time lump sum or shifting the balance of
equity and debt on its books. For the economy overall,
buybacks have the effect of distributing capital specifically
to those owners who choose to participate because they
believe they have a more productive use for it. Capital flows
from companies that don't need it to companies that do.
Democrats are telling companies: If you return value to your retirees or to retirees in the country or if you return value to people's investment in 401(k) plans or the pension plans, then you will pay a punitive tax.
The majority of American households have direct or indirect ownership of corporate stock via pensions, 401(k) plans, or other saving vehicles.
Here are some interesting statistics about the Americans who will bear the burden of this tax:
Eighty to one hundred million Americans have a 401(k) plan, 46.4 million households have an individual retirement account, and half of the Generation Zers and millennials are invested in stocks.
Seniors are especially dependent on investment income.
The Association of Mature American Citizens reports that 68 percent of workers between the ages of 55 and 64 were active participants in a retirement plan to save for their golden years and that, on average, 40 percent of seniors' net worth is held in stocks and mutual funds invested over and above those retirement accounts.
Companies also rely on investments by individuals and institutions like pension funds to finance their operations.
Successful companies use this capital to generate profits, which are then used for expansion, for research and development, for hiring and for benefits, and for investment in communities. Companies may also choose to pay down their debt or return excess funds to shareholders.
Restricting stock buybacks could force companies to sit on cash or waste it on low-potential projects, both of which limit our economic growth and prosperity.
The Tax Foundation points out:
A large body of evidence supports the idea that companies
generally only consider stock buybacks when they have
exhausted their investment opportunities and met their other
obligations, meaning it is residual cash flow that is used
for buybacks. In fact, stock buybacks can supplement capital
investments, as they can help reallocate capital from old,
established firms to new and innovative firms.
This unvetted stock buybacks tax is a crippling tax that reduces retirement security for Americans.
So let's go to the next tax that they propose, and this one is the one that I said was just a little difficult to understand--the superfund tax and methane fee.
Now, I understand why they call it the superfund tax because it is a 16.4-percent increase on oil and gas production in the United States.
According to the Energy Information Agency, regular gasoline prices have risen $1.94 per gallon since President Biden was inaugurated, an increase of over 80 percent. Americans are still paying, on average, more than $4 a gallon for gas, and many can still remember the $5-a- gallon gas. The price for utility gas service is up by almost 40 percent.
These prices occur because President Biden shut down domestic energy production, including through permitting delays and canceling pipelines like the Keystone XL Pipeline.
Now--again, unbelievably--the President's Democrat allies in Congress are doubling down with a methane tax and higher royalties on petroleum, reimposing and increasing by nearly 70 percent the Superfund tax on refiners of crude oil, importers of petroleum products, and crude oil exporters, costing almost $12 billion over 10 years that will ultimately be borne by American motorists. And Americans know that.
In addition, higher taxes diminish the ability to improve domestic supplies of oil by making capital investments cost prohibitive at a time when the U.S. has already lost 1 million barrels a day of refining capacity compared to before President Biden's unwise restriction of fossil fuel production in the United States.
On the methane fee, the American Gas Association says:
New fees or taxes on energy companies will raise costs for
customers--
Americans understand this. He continues:
[C]reating a burden that will fall most heavily on lower-
income Americans. . . . based on similar proposals introduced
earlier this Congress, we estimate that the fee could amount
to tens of billions of dollars annually. These major new
costs most likely will result in higher bills for natural gas
customers, including families, small businesses, and power
generators.
Any increase in low-income households' energy costs could
prove devastating.
The bottom line on taxes is that millions of Americans will bear the burden of these tax hikes. Some of my colleagues have claimed that those tax hikes are worth the supposed benefit. But let's look at those benefits.
Drug price reform is one they refer to. The largest source of supposed savings in the Democrats' bill is a system of bureaucratic drug price controls that will lead to: higher launch prices, stifled growth, gutted domestic manufacturing jobs, and aiding foreign adversaries like China; higher launch prices for new medications, triggering financial strain at the pharmacy counter, as confirmed by the Congressional Budget Office; hundreds of thousands of American job losses, particularly in domestic manufacturing, which is already getting hit by the new book minimum tax, with some estimates projecting as many as 800,000 job losses; a competitive edge for the Chinese Communist Party, which has singled out biomedical innovation as a
pillar of its industrial policy strategy and could ultimately supplant the United States as the global life sciences leader, with a profound amount of national security implications; an unprecedented expansion of the DC Federal health bureaucracy, financed with a staggering $3 billion in new administrative spending as the Federal Government takes even greater control over another segment of our healthcare economy.
This bureaucracy would also have unbridled new government price- setting authorities with permanent prohibitions on even judicial and administrative review and with initial implementation shielded from basic notice-and-comment rulemaking requirements; fewer new treatments and cures, with the University of Chicago analysis estimating 135 fewer new drugs approved between now and 2039, resulting from an 18.5 percent reduction in innovative research and development.
There would be less funding for cancer R&D. Today, nearly 50 percent of the FDA pipeline is comprised of new cancer treatments. However, according to the same economists at the University of Chicago, the drug price controls would reduce funding for cancer R&D by nearly $18.1 billion, over 9 times the amount of funding proposed for President Biden's Cancer Moonshot--so much for the President's Cancer Moonshot.
There would be dangerous new mechanisms for compelling total compliance with Federal Government mandates, with potential applications across all sectors of the economy, including: an escalating noncompliance penalty of up to 95 percent on all gross sales levied every day for failure to meet any terms of the government's price-setting program--negotiation in name only--rendering any new Federal mandate, however sweeping, an offer you can't refuse. Even late paperwork would trigger this crippling, catastrophic penalty, which has a tax-exclusive rate of up to 1,900 percent. It is negotiation in name only.
As a messaging gimmick, the Democrats have framed their government price-setting program as ``negotiation,'' but their legislation tells a far different story. Under their proposed program, the Secretary has absolute, unilateral, uninhibited price-setting authority--with no floor--enabling a price of $1 for even the most innovative new drugs. Manufacturers have no choice but to comply and to provide indefinite access to their products at the Secretary-dictated price, regardless of how unfair. They cannot walk away from the negotiating table or withdraw selected products from the Medicare market, even if the Secretary sets an economically untenable price, stripping even small businesses of any leverage.
Judicial and administrative review of key decisions, including the price setting itself, are permanently prohibited.
The bill completely disregards the rest of the prescription drug supply chain, targeting manufacturers while doing nothing to address other key players or to improve oversight and transparency.
There is a better way. It is called the Lower Costs, More Cures Act. Senate Republicans have developed a commonsense alternative, based on more than two dozen solutions, aimed at providing relief at the pharmacy counter while ensuring long-term access to lifesaving new treatments and cures.
Among other provisions--virtually all of which are based on proposals with bipartisan support--the Lower Costs, More Cures Act would reform the Part D benefit to reduce seniors' cost-sharing burden and incentivize plans to negotiate the best deals possible for enrollees. It would create a hard cap on the annual out-of-pocket spending for all seniors under Medicare Part D. It would increase Part D plan choices for seniors by enabling sponsors to offer additional plans with incentives for options that pass a greater share of the discounts directly to their beneficiaries at the pharmacy counter.
It would permanently extend a Trump administration program providing Part D enrollees with access to plan options that cap out-of-pocket monthly insulin costs at $35 or less.
It would permanently allow high-deductible health plans to offer predeductible coverage for preventive services, including insulin.
It would establish a chief pharmaceutical negotiator to combat foreign freeloading, ensuring the best trade deals achievable for American consumers and job creators.
It would strengthen consumer-oriented oversight through more useful cost comparison tools, price transparency measures, and robust reporting requirements for stakeholders across the drug supply chain, including pharmacy benefit managers.
It would facilitate value-based arrangements where private and public sector payers can pay based on patient outcomes, driving better results for patients at a lower cost. And it would restructure payments for drugs administered in the doctor's office or hospital outpatient department to encourage physicians to deliver cost-effective treatment options when clinically appropriate.
These are the kinds of solutions that our prescription drug pricing system requires, not an arbitrary and offensive Federal price-fixing program.
Now, let's move on, finally, to the IRS funding for an army of auditors. This bill proposes $80 billion in new spending in mandatory appropriations to the IRS.
Let me give that a little perspective. The annual budget of the IRS is only about $12.6 billion. So it is nearly six times the annual budget of the current IRS. Of this, $45.6 billion is for enforcement purposes. That is more than 57 percent--almost 60 percent of this $80 billion is for enforcement purposes--and I will get to that in a minute--$25.3 billion for operations and support; only $4.8 billion for improving their business systems and bringing themselves into the 21st century with their technology so they can communicate with taxpayers; and only $3.2 billion for taxpayer services.
Some estimate that this part of the chart--the $46 billion for an army of auditors--will allow us to hire as many as 87,000 new auditors. That would make the IRS one of the largest Federal Agencies--larger than the Pentagon, larger than the State Department, larger than the FBI, and larger than the Border Patrol--all of them combined.
According to the Congressional Research Service, the Democrats' reckless IRS funding increase would raise enforcement funding by nearly 70 percent above what the IRS is currently projected to get. Increased audits for the middle-class, for small businesses, and those making less than $400,000 are inevitable and unavoidable under this act.
How will this money be used? Well, interestingly, the White House-- after we started pointing this out, the White House and even the IRS Commissioner have said they won't use all this money for auditing people who make less than $400,000. And my colleagues just continue to say they won't do it.
Multiple studies show, however, that in order to raise the money they are requiring to be raised under this bill from audits--around $200 billion of more tax revenue from Americans by auditing them--they have nowhere else to look.
Last year, the IRS announced that it plans to ramp up audits of small businesses by 50 percent this year. Why did they announce that? Because that is where they need to look to collect all of this new tax revenue that they want to get. So I asked the nonpartisan Joint Tax Committee to estimate where most of this tax gap lies. Where is this trillion dollars of tax gap that my colleagues on the other side say is all coming from ``big'' tax cheats? The IRS looked at the data and determined that out of all the revenue projected to be raised from underreported income, 40 to 57 percent could come from taxpayers making $50,000 or less; 65 to 78 percent could come from taxpayers making $100,000 or less; and 78 to 90 percent could come from those making less than $200,000. Only around 4 to 9 percent could come from those making over $500,000. That is what the data shows.
That is why the IRS announced a 50-percent increase in audits for small businesses, and that is why it is impossible for the Democrats' claims that they want to not have audits of people under $400,000 cannot be honored.
You know, in their bill in response to this criticism, they included a sentence that said, Nothing in this bill is ``intended''--focus on that word--nothing in this bill is intended to increase taxes on those making less than $400,000.
Why did they use the word ``intended''? Because they know that that is not what they want to have happen, but it is what will have to happen, and they are not willing to use a stronger word.
I have asked them--and I will ask them in an amendment on this floor--to say that none of this money can be used to audit taxpayers making less than $400,000 a year. Let's see how they vote on that amendment.
Why couldn't they just say that this money ``shall not'' increase taxes on people making under $400,000 per year? Why couldn't they say that these funds ``cannot'' be utilized to audit taxpayers making less than $400,000 per year? Because they know they can't say that and claim the amount of revenue that they want to spend unless they audit those making less than $400,000 per year. The fact is, the tax cap isn't just millionaires or billionaires or oligarchs or whatever the term of the attack is today. Referring to all tax gaps and misreporting--that everybody who has not accurately reported their income is a ``tax cheat''--is misdirection. It calls all of these people who make less than $400,000 who are simply having trouble with this complex Internal Revenue Code a tax cheat. That is unfair.
We have examined the IRS's own data on how successful it is in having the courts sustain--sustain its claims that these folks in the $400,000-or-less category and other categories are cheating on their taxes.
Over the past 20 years, the IRS has had a less than 47-percent success rate and a less than 45-percent success rate over the last 10 years. In other words, the IRS more often asserts that these deficiencies exist than the courts agree with. That is hardly evidence for a multitude of tax cheats, but it is firm evidence that innocent taxpayers are often subjected to unnecessary and inappropriate scrutiny. We can be sure they will be with 87,000 new auditors--again, making the IRS larger than all of those other Agencies that I talked about.
By the way, folks may remember just a short time back when the proposal also included language that would let the IRS get into the bank accounts and monitor the transactions of the deposits and withdrawals of all Americans. Well, let me say it better--all Americans who had more than $10,000 worth of transactions in a year, which is, essentially, almost all Americans. Now, admittedly, that language isn't in this bill yet, but the broad authority that is given to the Internal Revenue Service with this $80 billion of supersizing will undoubtedly result in rules and regulations issued by the IRS to achieve that objective. They just knew that they couldn't put it in statute because they would be rejected immediately by the American people.
I encourage the American people to see past this and to reject this legislation. It is too many taxes, too much spending, and too big of a burden on the American people across all income categories. We don't want to supersize our Internal Revenue Service, and--go back to that very first statistic I gave you--it is not even going to have a statistically significant impact on inflation. If anything, the taxes will drive prices up.
I encourage all of my colleagues to reject this reckless bill.
With that, I yield my time.