PA CHAMBER, US CHAMBER: INFLATION REDUCTION ACT IS A BAD DEAL
With businesses facing historic inflation, the PA Chamber, US Chamber and business leaders across the country are sending the message that now is not the time to raise taxes on businesses – especially through changes to the federal tax code that would disproportionately impact manufacturers and capital-intensive industries, like energy production and utilities. The PA Chamber is also concerned proposed tax increases contemplated in a deal struck between West Virginia Senator Joe Manchin and Senate Majority Leader Chuck Schumer will detract from the monumental progress Pennsylvania is making with recently enacted, pro-growth reforms to the state’s tax code.
The U.S. Senate passed the sprawling economic package by a vote of 51-50, with Vice President Kamala Harris casting the tie-breaking vote. The U.S. House is expected to begin consideration of the legislation Friday, August 12th.
In an op-ed published last week, the PA Chamber’s Kevin Sunday notes the “proposal, which appears to be designed to game the Senate’s reconciliation process to pass spending bills, departs from recent congressional successes that leveraged bipartisan compromise to produce meaningful progress on energy and regulatory reform. The bill will also raise taxes on businesses already reeling from historically high costs on goods and materials, and vague promises that the bill will be followed by permit reform later this winter (when the Senate’s legislative agenda is already overcrowded) raise the question: Why not just work across the aisle now, given how many Republicans have energy and regulatory reform priorities of their own?”
The PA Chamber also joined dozens of state and local chambers across the country in signing a coalition letter spearheaded by the US Chamber opposing the proposed tax increases. In the letter, the business groups note that the bill “includes taxes that would discourage investment and undermine economic growth and price controls that would limit American innovation. Despite the name of the bill, independent analysis confirms that it would have little to no impact on inflation and may in fact increase inflationary pressure in the near-term.”
Tax increases in the proposed deal include a 15 percent minimum book tax, a $900 per ton fee on fugitive methane emissions for oil and gas producers, an additional tax on the energy industry that could raise gasoline costs sixteen cents per gallon, changes to the treatment of carried interest and price controls on pharmaceuticals. The Tax Foundation has compiled additional analysis of the proposed tax changes here, noting the tax increases will result in job losses and a reduction in GDP and wages. The analysis notes that “by reducing long-run economic growth, this bill may actually worsen inflation by constraining the productive capacity of the economy.” Sen. Kyrsten Sinema of Arizona indicated Friday, ahead of a potential weekend vote, she was seeking changes to some of the tax provisions, including protecting some depreciation deductions against minimum book tax liabilities.