Former Trump Chief Economist Larry Kudlow says President Joe Biden's tax plan is an “assault on investment.”
“There's some pretty tough headwinds ahead if these taxes, which are an assault on investment ... and the people they are going to hurt the most are the middle class, the blue collar middle class, [who will bear] 70% of the burden of the corporate tax, which includes the capital gains tax, 70% of that burden falls on the blue-collar middle class. Make no mistake about that Biden rhetoric notwithstanding,” Kudlow on Sunday told John Catsimatidis on his radio show, "The Cats Roundtable " on WABC 770 AM.
When corporate profits are down that means less investment, less capital, which results in less family income, he explained.
“You're going to take about 20 to 25 percent of corporate profits down. Now, that means less investment, that means less money to payout wages, that means less money to purchase new machinery and equipment to enhance productivity, and that means family incomes are gonna go down. That's the cap gains tax, which runs through corporate profits taxes,” said Kudlow.
Because of Biden’s tax plan, over time, the Gross Domestic Product (GDP) will drop 1 percentage point, “this is not good,” he added.
“The rest of the Biden plan - they're going to remove the 20 percent deduction for small LLC, S-Corp, you know, wholly owned enterprises, unincorporated, 20 percent deduction is gonna be disallowed along with the hike on the C-Corps to 28 percent, and the 21 percent tax on U.S. funds held overseas. These are gigantic tax hikes and I just summarized it. It means less investment, less capital formation, it means less innovation and invention and research and development. It means fewer wages and lower family income," he said.
Under former President Donald Trump’s economic principals “we're in a boom,” he said.
“This economy is in good shape because right now before new legislation. Tax rates are low, and the regulatory burdens are low, and we still have energy independence,” he said.
Kudlow asked, “Why would you start taxing the daylights out of an economy that is roaring ahead? I don’t get it.”
“Don't use your ideology from the left to smother this boom for heaven sakes--use common sense," he said. He continued; this is ideology. This is a progressive left wing ideology tax. The rich redistribute incomes to build up a new great society, a social welfare state, he said.