In yet another disappointing jobs report, the Bureau of Labor Statistics (BLS) found that the U.S. economy added just 194,000 jobs in September. This is a far cry from estimates which predicted the economy would add 500,000 jobs. The unemployment rate now stands at 4.8 percent.
7.7 million Americans are still out of work and millions of Americans are still underemployed. About 4.5 million workers are employed part-time for economic reasons, meaning they would prefer to work full-time, but cannot gain the hours needed to do so.
Given the economy remains weak, now is a terrible time to impose trillions of dollars in taxes as the Democrats have proposed. Their most recently released bill includes numerous concerning tax increases:
- The bill would raise the corporate rate to 26.5 percent, higher than communist China’s 25 percent rate. Under this plan, the average combined state and federal corporate tax would be 31 percent. A corporate tax hike would be borne by workers and consumers. As noted by Stephen Entin of the Tax Foundation, workers bear nearly 70 percent of the cost of a corporate tax through lower wages and fewer jobs. Further, a 2020 study by the National Bureau of Economic Research found that 31% of the corporate tax falls on consumers. This tax hike would hit many small businesses as well. Over one million C-corporations are classified as small businesses, defined by the Small Business Administration as any independent business with fewer than 500 employees.
- The bill would raise the capital gains rate to 25 percent. This tax hike will threaten business creation, business expansion, entrepreneurship, retirement savings, and jobs and wages.
- This bill could impose $96 billion in tax hikes on tobacco and vaping. This will disproportionately harm the poorest Americans, as 72 of smokers are low-income earners. In some states, poorer smokers already spend one quarter of their income on tobacco.
- This bill would also increase the top income tax rate to 39.6 percent. This tax increase will hit small business that are organized as sole proprietorships, LLCs, partnerships, and S-corporations. These “pass-through” entities pay taxes through the individual side of the tax code. Of the 26 million businesses in 2014, 95 percent were pass-throughs. Pass-through businesses also account for 55.2 percent, or 65.7 million of all private sector workers. More than half of all pass-through income would be taxed at this new, higher rate.
Today’s disappointing jobs report shows that we still have a long way to go to fully recover from the economic damage the pandemic caused. Virtually every jobs report released under the Biden administration has been well below expected growth. Certainly, Democrats should be more concerned about safeguarding a fragile economy than ramming through their policy wishlist.