[Epoch Times, August 12, 2022]The so-called Inflation Reduction Act, which has just been passed by the U.S. Senate, is expected to be passed by the House of Representatives, and is about to be signed by Biden, can be said to have the connotation of red socialism. Dressed in the guise of a green energy policy, the red-and-green US Inflation Reduction Act is likely to be a series of wasteful and erroneous implementations that do nothing to reduce US inflation.
Judging from the specific content of the “Inflation Reduction Act” just passed by the Senate, it is a scaled-down version of the original $4 trillion green energy and multi-taxation (BBB) policy of the Democratic Party and the Biden administration in the US political arena to try to It could be passed more easily in both houses. The “Inflation Reduction Act,” a whopping $437 billion, spends a lot of money on green energy programs, increases government subsidies to lower drug prices, raises taxes to cover the federal government’s deficit, and is funded by a new wave of small- and medium-sized companies. Taxes to fill the budget hole. Among them, the amount invested in the climate and clean energy plan is as high as 369 billion US dollars. On top of the $369 billion in climate and clean energy plans, there is $300 billion in green loan guarantees, $80 billion in doubling the number of IRS tax collectors, $60 billion in so-called environmental justice programs, and more. In addition, the Democratic administration is also eager to make a difference, hoping to come up with an economic plan that can stabilize middle voters before the midterm elections.
The new bill, which would impose a minimum corporate tax rate of 15 percent for U.S. businesses, looks like a tax cut that is even more appealing than the 21 percent corporate tax rate proposed by President Trump in 2017. But that’s not the case, because the tax rate is aimed at businesses that have been eligible for a series of credits and deductions in the past and have been able to pay little or no tax. Tax experts call the measure a book tax because it applies to a business‘ earnings on the books or financial statements. However, this calculation method is different from the traditional calculation method of income statistics for taxation. So, that actually means more taxation on U.S. businesses.
The new regulations, which will impose a 1% exercise tax on corporate actions to implement treasury shares, are expected to take effect in early 2023. The so-called “treasury stock” means that the company repurchases the stocks that have been publicly issued and deposits them in the company. A consolidation and strengthening of shareholder interests is a conservative approach. On the company’s balance sheet, treasury shares cannot be listed as company assets, but are negative numbers and listed as shareholders’ equity. It can be said that treasury shares are the return of the company’s operators to shareholders, which is more tax-efficient than direct dividends. The implementation of new regulations by leftist governments, which will harm shareholders and shareholders, may force companies to choose to pay dividends rather than spend money to buy back treasury shares. This kind of radical approach, which is contrary to conservatism, is just like so many radical economic policies on the left. It will stimulate consumption at the moment, have fun at the moment, and be drunk at the moment, but it will hurt the future of the US economy. . In fact, the government is also likely to lose money by stealing chickens, because companies may push a series of treasury stock plans before the regulations hit the road.
The new regulations, aimed at promoting green energy and reducing so-called carbon emissions, will provide low- and middle-income households with a $4,000 tax credit for buying a used electric vehicle and a $7,500 tax credit for those buying a brand-new electric vehicle. That’s a boon for automakers like Tesla, Ford and General Motors that make electric cars. But what people often overlook is, where does the powerful electricity when charging electric vehicles come from? The mere solar power generation is simply not enough. If it is because of the increase in thermal power generation, fossil fuel power generation and nuclear power that enough electricity can be generated, can the so-called carbon reduction goal be truly achieved?
The bill plans to put $369 billion into the “Climate and Clean Energy Plan,” and includes $60 billion in incentives to bring clean energy manufacturing to the United States. Production tax credits will also be provided to speed up the processing of U.S.-made solar panels, wind turbines, batteries and critical minerals. As the world knows, China is the world‘s largest manufacturer of solar panels and wind turbines. Unless the Biden administration imposes higher tariffs on solar panels and wind turbines from China, restarting President Trump’s trade and tariff wars, how can it fend off the low-price offensive on Chinese products and components? Will American taxpayers’ money go to subsidize Chinese companies under the banner of “climate and clean energy”? The Biden administration is still considering canceling tariffs on the CCP. Wouldn’t this be even more polar opposite?
The Democrats’ goal of lowering energy costs, incentivizing solar energy and other alternative forms of production, and transitioning the United States to “cleaner production” is simply impossible to achieve. Such a massive tax and spending proposal, increasing government spending, would overwhelm America’s middle class and allow already record high inflation to worsen. Inflation cannot be eased without cutting wasteful spending, and spending more to pursue unrealistic green targets will only fuel inflation in the United States.
230 prominent American economists, including Nobel Laureate in Economics Vernon Smith, former White House Council of Economic Advisers Chairman Kevin Hassett, former White House Office of Budget and Management Director Jim Miller, former Federal Reserve Chairman Robert Heller (1986-1989), and Economics professors from the University of Chicago, Princeton University, Duke University, the University of Virginia, Columbia University, and the University of Notre Dame jointly signed an open letter on August 3 to the U.S. Senate Majority Leader, Minority Leader, House of Representatives The Speaker and Minority Leaders warned them that although the United States must pay attention to the serious inflation problem, what this bill can do is just the opposite, and it will immediately increase inflationary pressures in the United States.
The United States is currently facing the highest inflation in more than 40 years, and the leftist government, under the coercion of green energy policies, took the opportunity to launch socialist measures such as expanding government spending, expanding government size and power, and increasing social welfare. Strategy, such a so-called “inflation reduction” bill, red makeup and green wrap, it is not only wrong, but also far-reaching.
(Dr. Xie Tian is Professor of Marketing at the University of South Carolina Aiken School of Business and John Olin Palm Chair Professor)
Responsible editor: Zhu Ying