Infrastructure has always enjoyed bipartisan support in Congress. Republicans and Democrats have a long history of working together to support our nation’s highways, bridges, flood control systems, and ports. This past week, Republicans introduced a sizable $568 billion proposal to improve our nation’s roads, bridges, rail, ports, and water systems. The plan also includes $65 billion for broadband, which would go a long way toward connecting underserved rural communities to the internet.
Some Democrats, however, are pushing a separate bill that would cost taxpayers more than $2 trillion and would include many non-infrastructure priorities. Their bill would be financed with huge sums of debt along with tax increases on job creators, including manufacturers, retailers, and countless small businesses. I fear this could stall our economic recovery.
Climate Initiatives Are Not Infrastructure
Most Americans would not recognize the Democrats’ proposal as an infrastructure bill. Only six percent of the bill’s money would go toward roads and bridges; the lion’s share would be spent on unrelated climate initiatives. The bill includes $213 billion to convert homes and buildings to being “climate friendly,” $174 billion to subsidize electric cars, $35 billion to support green innovation (which is already doing well), and $10 billion to launch a Civilian Climate Corps. One particularly bad provision would ban right-to-work laws, which currently protect workers in 28 states from being forced to join unions.
The worst aspect of this bill, however, is the tax increases. President Biden has proposed raising the corporate tax rate from 21 percent to 28 percent – higher than China and most developed countries in the world. When factoring in state and local taxes, Biden’s plan would force job creators to pay a combined rate of 32 percent. This would be a dramatic reversal of the tax cuts Republicans passed in 2017, which helped to fuel explosive job creation and wage growth before the pandemic hit.
Tax Hikes Could Slow Economic Recovery
Before Republicans passed the Tax Cuts and Jobs Act, America had one of the highest corporate tax rates in the world. This made our country a less attractive place for investment and discouraged companies from expanding and hiring new employees. The tax cuts were a game-changer. Between 2018 and 2019, wage growth for American workers increased from 2.4 percent to 3.8 percent, household income grew by 6.8 percent, and $1.6 trillion in investment returned from overseas. Even with the pandemic, we are on track to add 11.4 million jobs by 2025, thanks in large part to the improved tax environment. Hiking taxes now would pour cold water on the economy at the worst possible time.
Experts are sounding the alarm over President Biden’s tax proposal. Moody’s Analytics has predicted it would cause an economic slowdown by next year. Economists at Rice University say the plan would lead to one million job losses within two years. The tax hikes would assuredly hit energy producers, leading to higher utility bills for American families. Higher corporate taxes would also hit retirement accounts such as 401(k)s, which depend on long-term industry growth.
I have spoken with the President personally and urged him to meet Republicans at the negotiating table. We are eager to reach a good-faith compromise that will provide critical upgrades to our nation’s infrastructure. But we cannot do this by soaking job creators and piling on new debt for our children.