A former economic adviser to President Ronald Reagan thinks the Biden administration is wrong in its belief that growing the Internal Revenue Service by 87,000 additional agents will lead to more tax collection from the wealthiest Americans.
“They have a lot of lawyers, they have a lot of accountants, they have a lot of different revenue specialists,” Art Laffer, the economist who served as a member of the Economic Policy Advisory Board during the Reagan administration. said about the richest citizens of the country.
“They have many favorite robbers. They have a lot of lobbyists, they have a lot of influence,” Laffer told Just The News.
“They know the tax codes inside out and they’ve done all these things. I don’t care how many IRS people you go after, you’re not going to get any more money from them.”
President Biden signed the Inflation Reduction Act into law on Tuesday.
Biden and Democratic lawmakers say it would raise $737 billion in revenue by imposing a minimum corporate tax of 15%, as well as a 1% tax on stock purchases. The money is earmarked to fund climate initiatives as well as reducing the cost of prescription drugs.
But Laffer thinks it will be the middle class that will bear the brunt of the tax increase.
“If you raise tax rates, what you find is that the average tax income of the top 1% goes down, not up,” he said.
“And that’s because they use all these loopholes and all these tax shelters.”
The Congressional Budget Office seems to agree with Laffer.
The nonpartisan CBO released an analysis estimating that those making less than $400,000 — the tax bracket that Biden vowed would not penalize — would pay about $20 billion more in taxes over the next decade as a result of the legislation.
The Democratic-led Senate rejected an amendment to the bill proposed by Sen. Mike Crapo (R-Idaho) that sought to exempt taxpayers earning under $400,000 from increased IRS scrutiny.
Democrats also claim the bill will reduce the deficit and lower inflation, but Laffer thinks higher consumer prices are here to stay for the foreseeable future.
“There’s no chance between now and Sunday, frankly, in my world view, that we’re not going to see inflation rise above 10% by the time we get into [midterm] elections [this coming November]”, he said at a conservative student gathering last month.
Inflation rose 8.5% in July – slightly down from 9.1% in June. The rate at which consumer prices are rising has not been this high in four decades.
The Biden administration was criticized for its “Orwellian” claim that July saw “0% inflation,” but Laffer thinks there is some truth to that statement.
“The president, as you know, said last month’s inflation – July was only at 0%, which is true,” Laffer said.
“It’s true. Oil prices fell dramatically and were enough to offset the rise in other prices,” he said.
Laffer added: “But what he didn’t tell you is last month – the June number – the number before July was 17+%.
“So that’s why we look year-over-year is because you get these volatilities, these whistle-bobbles up and down in certain months,” Laffer continued.
“But if you look at it over the whole year – this last poll, July’s was 8.5%, while the previous month it was 9.1%.
“But that’s still an extremely high number.”