The Wall Street Journal editorial board published a piece Sunday that criticized the reconciliation deal struck between Sen. Joe Manchin (D-W. Va.) and Senate Majority Leader Chuck Schumer.
The article, titled “The Schumer-Manchin Tax Increase on Everyone,” argues that the “Inflation Reduction Act” will harm the economy and effectively make Americans poorer.
“Majority Leader Chuck Schumer wants a Senate vote on his partisan tax deal with Joe Manchin as early as this week, and no wonder he wants to rush it through,” the board wrote. “The more Americans learn what’s in this tax-and-spend behemoth, the more they’ll dislike it.”
“Their Senate bill hits U.S. manufacturing especially hard, and it raises taxes on Americans making less than $400,000 a year,” the board continued.
The board said the legislation could help ease inflation but at the cost of the economy going into a recession. the $327 billion in new taxes could soften inflation if
“The $327 billion in new taxes could slow inflation if the economy falls into recession, and that may be the quiet expectation. The tax increases on business will discourage investment while the Federal Reserve is also raising business costs with higher interest rates,” it wrote.” But tax policy should be working in the opposite direction to encourage investment when the Fed is tightening and the economy is close to recession.
The board noted that the legislation will be most harmful to domestic manufacturers and cited a report from the non-partisan Congress Joint Committee on Taxation. The report found that 49.7% of the tax would fall on domestic manufactures. The legislation would also tax Americans earning less than $200,000, breaking a campaign pledge President Biden made during the 2020 election.
“Taxes will rise by $16.7 billion in 2023 on Americans earning less than $200,000 a year. Taxpayers earning between $200,000 and $500,000 will pay $14.1 billion more,” the board wrote.
“This gives the lie to Democratic claims that no one earning under $400,000 will pay more taxes under the bill, a promise Mr. Biden also made in his campaign. The reality is that the Schumer-Manchin bill is a tax increase on nearly every American,” it continued.
The board warned supporters of the bill how new taxes on workers and businesses will unlikely be popular and that they would be “responsible” for the economic repercussions of the legislation.
The board wrote that those who support the bill “will be responsible for the economic consequences”. “Their new tax on workers is unlikely to be a political or economic winner.”