[Congressional Record Volume 167, Number 159 (Wednesday, September 15, 2021)]
[Senate]
[Pages S6517-S6519]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                                Economy

  Mr. PORTMAN. Mr. President, I am here on the floor of the Senate 
today to talk about our economy, talk about the new massive tax hikes 
that Democrats in the House of Representatives have now proposed to pay 
for the $3.5 trillion spending spree that is called ``reconciliation.'' 
I want to talk about why it is bad for American workers, why it is bad 
for our economy, bad for small businesses, and bad for American 
families.
  They call it the Build Back Better plan, but it is really tearing 
down what helped us to be better and what helped to make us a more fair 
economy and an opportunity economy, by getting rid of the positive 
aspects of the 2017 tax reform and tax cut legislation and, instead, 
putting in place massive new tax increases.
  By the way, these tax increases go even beyond eliminating the tax 
relief that was provided in 2017. In many cases, it provides additional 
tax increases even higher than we had before 2017.
  We had a historically strong economy leading up to COVID-19, in large 
measure because of this 2017 Tax Cuts and Jobs Act, which focused on 
expanding opportunities for businesses to grow; for families to take 
home more of their hard-earned cash; and for the United States, as a 
country, to be able to compete globally. It made us more competitive.
  As a result, before COVID-19, we saw record growth in jobs and wages. 
In February of 2020, as we were getting into the COVID-19 pandemic, we 
had 19 straight months of job growth and wage growth of over 3 percent 
annualized. For 19 straight months, we had seen wages go up every 
single month. We had wages above inflation for the first time really in 
a decade and a half in my home State of Ohio.
  This benefit in wages went mostly to lower-income workers and middle-
income workers--exactly what you would want. This follows a study by 
the nonpartisan Congressional Budget Office, or CBO, that found that 70 
percent of corporate tax cuts end up going into workers' wages--70 
percent goes into workers' wages and benefits.
  So it all made sense. As we made America more competitive, as we made 
our businesses more competitive--small businesses and large 
businesses--what we saw was wages going up and wages going up for 
everybody. But, again, the highest percentage increases were actually 
among those who were at the lower end of the income scale, or middle-
income workers.
  During that time period, just before COVID-19 hit, we also tied the 
50-year low in unemployment. We had 3.5 percent unemployment. We had 
historic lows in unemployment, by the way, the lowest ever for certain 
groups in our economy, including Black workers and Hispanic workers.
  We had, in 2019, a median income for U.S. households that had the 
largest inflation-adjusted gain going back to at least 1967. So you had 
to go back to the 1960s to find incomes rising that much.
  And before the pandemic, we had the lowest poverty rate ever 
recorded. So for the 60 years we have been recording the poverty rate 
in this country, it was the lowest it had ever been, going into the 
pandemic. That is good news. We should be celebrating that.
  And, again, what Democrats are now talking about doing is going back 
and changing that very law by increasing taxes in a massive way that 
created so much of that opportunity.
  Those 2017 reforms also helped the U.S. compete globally by stopping 
what were called corporate inversions that were a recurring problem 
during the Obama administration and during the first year of the Trump 
administration. This is where U.S. companies actually said: You know 
what, our tax laws are so bad in this country, we are going to invert, 
meaning we are going to become foreign companies.
  So we had companies in my State of Ohio and other States around the 
country actually say: We are not going to be American companies anymore 
because we can't compete with the Tax Code we have got here. We are 
going to become foreign companies.
  A lot of us criticized that and strongly urged these companies not to 
do it, but the reality was our Tax Code was driving it; and that is one 
reason we changed the Tax Code in 2017, to stop this movement of jobs 
and investment overseas and to say we would rather have you invest here 
in America, and it worked.
  Prior to that time, there was something called the lockout effect, 
where companies would keep their earnings overseas. They made money 
overseas, they kept it overseas, and they never brought it back to 
America. After this law, $1.6 trillion in overseas earnings came back 
home to America to invest here and create jobs here.
  As a result of these changes, by the way, the largest U.S. companies 
increased their domestic research and development spending--R&D 
spending--by 25 percent, to $707 billion, and increased their capital 
expenditures by about 20 percent, to $1.4 trillion.
  That is good. We like that. We want more money to come back into 
America, invest in America, and increase research and development to 
make us more efficient and more technological and, therefore, more 
competitive and more productive. And we like the fact that there were 
capital expenditures going up because the Tax Code worked to create 
that incentive.
  All of this should make it clear that the opportunity economy we had 
in those couple of years before COVID, thanks to the 2017 tax reform 
changes, largely worked for everybody. Workers took home larger 
paychecks. The average American family saved at least $2,000 on their 
tax bill.
  But this tax plan before us now would throw all that out. Again, it 
tears down what makes us better. The massive tax hike being pushed by 
President Biden and congressional Democrats would be the largest tax 
increase since 1968, and almost no aspect of the Tax Code is left 
untouched.
  This include increases in estate taxes. Now, this is a problem 
because if you are a business and you want to pass along your business 
to the next generation, you got to be sure the estate tax isn't so high 
that the government, in effect, has a confiscatory rate where you have 
to sell the business in order to pay the taxes.
  Capital gains taxes go up. This is taxes going up on investment. We 
want to encourage capital gains because that is assets you hold for a 
while. We want to encourage more investment in this country. That 
creates jobs and makes us more productive.
  It increases taxes on retirement accounts. It increases income taxes. 
It increases small business taxes. So if you are a small business owner 
in America, watch out. It increases corporate tax. We talked about how 
we lowered corporate taxes to make them more competitive, and the 
result was they created not just more jobs but higher paying jobs, and 
they brought the money back from overseas. And the list keeps going 
from there.
  American workers and families will find themselves losing more of 
their hard-earned cash from all sides. Each of these proposed increases 
will be harmful. But as one of the people involved in the 2017 
international tax reforms, I am particularly concerned about the 
effects of undoing the reforms we put in place there to make us more 
competitive, and, specifically, the issue of raising the corporate tax 
from 21 percent to 26.5 percent, as proposed.
  Some, including here in the Senate, would like to raise that tax even 
higher.
  What is the problem with that?
  Well, it is pretty simple. Once again, America would have the highest 
corporate tax rate among all the developed countries in the world. That 
is not a good thing because it makes us less competitive. And it is 
about our workers. Ultimately, they are the ones who bear the burden, 
as we said.
  At 26.5 percent, we would have a national average on the corporate 
side of 31 percent when you take into account the fact that we have 
State and local corporate taxes here. Other countries, for the most 
part, don't do that. They have a Federal tax only. This means, again, 
we are going to have the highest corporate tax rate in the developed 
world.
  By the way, our rate could also be higher than China. So it is not 
just developed countries; it is also countries like China, who we are 
competing with, that would have lower rates than us. It creates an 
unequal playing field and making it really hard--in some cases

[[Page S6518]]

impossible--for U.S. workers to compete against rivals in places like 
China, but also the European Union and elsewhere.
  It also makes costly and complicated changes for U.S. companies to 
operate outside the United States, punishing American workers who have 
jobs here in support of those international sales. Remember, we are 
only about 5 percent of the global economy, and we are about 20, 25 
percent of the GDP. The economic mass of our country is something that, 
you know, we want to grow because that creates more jobs here.
  If you are a company in America that sells overseas, that is 
something we should encourage because it creates jobs here in America.
  I will give you an example. In my own hometown of Cincinnati, OH, the 
Proctor & Gamble Company is there. They are a global company. They sell 
all over the world. We like that because it creates a lot of jobs in 
Cincinnati. About 40 percent of the jobs in Cincinnati--I don't know if 
they have maybe 13-, 14-, 15,000 jobs now in our area--40 percent of 
those jobs are there only because of the international sales. They 
support the international side of the business. So this notion that we 
are going to raise our taxes so high that you can't compete 
internationally because other countries have such lower rates that 
their companies are going to beat you in the marketplace every time, 
that takes away jobs in America. We want to be a country that does 
business overseas, that sells stuff overseas because that creates jobs 
here.
  Under the Democrats' plan, investment in the United States will slow, 
and companies will begin, once again, saying: I am going to just become 
a foreign company. I hate that. We want more American companies here. 
They tend to take their jobs and investment with them when they do 
that, by the way, which makes sense.
  As I said, according to multiple studies, including the nonpartisan 
Congressional Budget Office here in Washington, it is the workers who 
are going to bear the burden of higher taxes in the form of lower wages 
and benefits and lost jobs.
  There was a 2017 study by another group called the Tax Foundation 
that found that 70 percent of corporate taxes are borne by workers. It 
is no surprise, then, that the nonpartisan Joint Committee on Taxation 
here in the Congress found that two-thirds of the Democrats' corporate 
tax hike would fall on lower and middle-income taxpayers, which 
includes the small businesses that file taxes as individuals.
  Meanwhile, because of the huge tax increases we are talking about, 
companies are going to raise their prices. American families are going 
to feel the pain in the form of higher prices at the store, on top of 
the surging inflation we are already seeing, thanks to the Biden 
administration's spending policies they have already put in place. That 
$1.9 trillion, almost $2 trillion in spending, so-called stimulus, that 
was one of the reasons, according to economists--right, left, and 
center--including Larry Summers, who is a prominent Democrat economist, 
that we see these huge inflation numbers, because when you throw that 
stimulus money out there, it increases inflation, which makes it more 
expensive to buy everything from gasoline to clothes and food. It makes 
the wage gains that we have been able to see recently much smaller than 
they would otherwise be because inflation is eating up those gains. So 
this is not what we want to do for our economy.
  On the small business side, the vast majority of small businesses pay 
their taxes on their individual tax return. So about 80 or 90 percent 
of the businesses in Ohio or around the country don't pay their taxes 
as corporations. They pay their taxes as individuals. So think about 
the small businesses in your community. They are probably partnerships 
or what is called subchapter S companies, passthrough companies of some 
kind. They might be sole proprietors. But their tax bill comes due on 
their individual tax return. Unfortunately, the Democrats are 
increasing the taxes on those people too.
  A lot of those people will be lumped into the expanded top bracket of 
the income tax code, and, therefore, they will be paying 39.6 percent 
income tax, plus a 3.8-percent surtax on small business income. So that 
takes them into a tax rate that is well above what they are paying now. 
They will be in the twenties now, and they will be in the forties under 
this new proposal.
  You might say: Well, that is for people in the top bracket.
  Well, those people in the top bracket are often small businesses. If 
you are a small business, all that revenue in the business is counted 
toward your revenue. You may take nothing out of the company. You may 
just take a dividend to just pay your taxes. That is what a lot of 
small companies do.
  I grew up in a small company like that. You know, we would issue a 
dividend to pay the taxes, but our income included all the income of 
the company. And that is the way America works. That is the way our Tax 
Code works. Some have argued that it shouldn't work that way, but that 
is the way it works. So when you raise taxes on individuals, you are 
also raising taxes on a lot of these small businesses.
  Adding to this, Democrats say they now want to eliminate the really 
important 20 percent deduction on qualified business income for small 
businesses.
  So for all the passthrough companies in America, pay attention. You 
know, that 20 percent deduction that is out there, Democrats are now 
saying they want to eliminate that altogether.
  That was designed to enable smaller businesses to be able to compete, 
to be able to have a level playing field between the corporations--the 
C corporations--that just tend to be the larger companies, and the 
passthrough companies.
  Additionally, small businesses that earn over $5 million will be 
saddled with an additional 3-percent surcharge under the Democrat plan. 
This means that so many of these small businesses that drive our 
economy, that are successful, that are employing so many people are 
going to have a harder time hiring workers or paying them competitive 
wages. Again, they tend to be smaller businesses, but they are the 
backbone of our company.
  About half of the workers in America work for businesses like this. 
So they may be 80 or 90 percent of the businesses, but because they are 
smaller, they employ about half the people. But this is where we get so 
much of our innovation. This is where we have so many opportunities for 
lower income workers to get a start. This is where the American dream 
is found.
  Under current policy, the Congressional Budget Office suspects that 
as the economy continues to recover from the pandemic, tax revenues 
will grow--and I quote them here--to ``18.1 percent'' of the economy, 
``GDP in 2022.'' So next year, 18.1 percent of the economy will be tax 
revenues, and then ``fluctuate between 17.5 percent and 18.1 percent'' 
of our economy ``through 2031.'' So they are saying taxes as a percent 
of the economy will be somewhere between 17.5 and 18.1 percent between 
now and 2031, over the next 10 years; next year, 18.1 percent.
  This is interesting because Democrats are saying, well, taxes need to 
be higher. The historical average is 17.3 percent. So the estimate from 
the nonpartisan Congressional Budget Office says we are going to be 
between 17.5 and 18.1, and next year, already, at 18.1 percent; 
whereas, the historical average is 17.3 percent. Even this year, as we 
are still recovering from the pandemic and tax receipts are less, it is 
expected to be 17.2 percent, based on the Congressional Budget Office.
  So you have to think about this. Why is there this great urge to 
raise taxes right now? Why tear down what worked? Why put America in a 
position where we are paying higher and higher taxes as a percent of 
our economy?
  Contributing to this revenue growth, the Congressional Budget Office 
projects that corporate tax receipts are going to climb to $379 billion 
in 2023, or 1.5 percent of GDP. According to the Tax Foundation, this 
will be ``a record high in nominal terms''--so that $379 billion will 
be a record high in corporate tax receipts--``and nearly matching 
average corporate tax collections as a share of GDP'' prior to the 2017 
tax reform. So, again, I just ask people to think about this.
  They say: Well, we need to tax companies more. Remember, you are 
taxing workers, according to the analysis of the Tax Foundation and the 
Congressional Budget Office. But, also,

[[Page S6519]]

those receipts are going to be at record levels and very close to, as a 
percent of the economy, where they were before the 2017 tax reform.
  What we should take away from these findings is that the economy is 
growing as we come out of this pandemic. We know this to be true. We 
have known it for months, really.
  The Congressional Budget Office projected way back in January that 
without any additional government help--no new COVID-19 packages, not 
including the $1.9 trillion spending package that Congress passed in 
March--that the economy would fully recover by midyear. And they were 
right, even as much of that spending has not gone out yet from the $1.9 
trillion.
  Payroll tax revenue has risen by about 4 percent, suggesting that 
workers are taking home bigger paychecks than before.
  So the economy is beginning a nice recovery. We need it to continue. 
The last thing you want to do is to slap a bunch of taxes on the 
economy right now and have the economy go down and have workers, in 
particular, bear the brunt of that.
  My question is: Why would you want to throw out a tax code that has 
helped fuel this unprecedented economic recovery we saw prepandemic and 
brought in more money in the process?
  In 2017, with this tax reform, we helped usher in an economy powered 
by workers and powered by small businesses and powered by more 
competitive larger businesses. It wasn't powered by big spending here 
in Washington, DC. The results worked. It was truly historic.
  Moving ahead, let's stay the course instead of hiking taxes and 
putting a damper on American prosperity and American opportunity for 
everybody to get ahead. A massive tax increase won't make us build back 
better. A massive tax increase will tear down what makes us better.
  I yield back my time.
  The PRESIDING OFFICER. The Senator from Minnesota.