{"id":7993,"date":"2023-03-19T08:22:24","date_gmt":"2023-03-19T13:22:24","guid":{"rendered":"https:\/\/ustower.net\/?p=7993"},"modified":"2023-03-19T08:22:28","modified_gmt":"2023-03-19T13:22:28","slug":"fact-check-biden-falsely-credits-tax-that-took-effect-in-2023-for-deficit-reduction-in-2021-and-2022","status":"publish","type":"post","link":"https:\/\/ustower.net\/?p=7993","title":{"rendered":"Fact check: Biden falsely credits tax that took effect in 2023 for deficit reduction in 2021 and 2022<\/strong>"},"content":{"rendered":"\n

President Joe Biden<\/u><\/a> falsely said on Wednesday that his new corporate minimum tax is the reason the federal budget deficit declined in 2021 and 2022. In reality, that tax didn\u2019t even come into effect until the beginning of 2023.<\/p>\n\n\n\n

Biden has repeatedly taken credit for reducing the deficit in 2021 and 2022 even though experts have said<\/u><\/a> that the vast majority of this reduction occurred simply because emergency Covid-19 pandemic spending from 2020 expired as planned \u2013 and that Biden\u2019s own initiatives made the deficits higher than they otherwise would be.<\/p>\n\n\n\n

We\u2019ve described Biden\u2019s previous deficit boasts as misleading<\/u><\/a> or missing key context<\/u><\/a>. But he went further in his Wednesday speech in Las Vegas<\/u><\/a> on lowering prescription drug costs, delivering a version of the story that is just not true.<\/p>\n\n\n\n

Biden said: \u201cAnd by the way, you know everybody said, well, how was I able to have these new programs and still cut the deficit $1.7 trillion the last two years? Well, it\u2019s pretty \u2013 pretty straightforward. There were 550 companies of the Fortune 500 that made $40 billion that didn\u2019t pay a penny in tax \u2013 zero, nothing \u2013 in taxes. So I said the \u2013 you know, outrageous. And we got votes for it. I said they ought to pay a minimum of 15%. Fifteen percent. That\u2019s less than you all pay. And guess what? It allowed me to cut the deficit.\u201d<\/p>\n\n\n\n

Facts First<\/strong>: Biden\u2019s \u201cpretty straightforward\u201d story about deficit reduction over the last two years is false. Though the 15% corporate minimum tax Biden signed into law in the August 2022 Inflation Reduction Act<\/u><\/a> is expected to reduce deficits in 2023 and beyond, the tax only took effect on January 1, 2023<\/u><\/a>, so it did not reduce the deficit in 2021 or 2022. Again, experts say the deficit fell in 2021 and 2022 primarily because of expiring pandemic spending, not Biden\u2019s own policies, which had the net effect of worsening the deficit.<\/p>\n\n\n\n

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a group that advocates deficit reduction, noted in a Thursday email that \u201ccorporations won\u2019t start paying the minimum tax until this year.\u201d She said the fact that Biden \u201ccontinues to take credit for the deficit dropping between 2021 and 2022 \u2013 which happened entirely due to the expiration of temporary COVID measures<\/u><\/a> \u2013 is cause for concern.\u201d<\/p>\n\n\n\n

Biden also got a key number wrong in this section of the Las Vegas speech. As he has correctly said<\/u><\/a> on numerous previous occasions, it was 55 big companies, not 550 companies as he said this time, that didn\u2019t pay any federal income tax in their previous fiscal year, according to an analysis<\/u><\/a> published in 2021 by the Institute on Taxation and Economic Policy, a liberal think tank.<\/p>\n\n\n\n

A White House spokesperson declined to comment for this article.<\/p>\n\n\n\n

Future deficit reduction, not past deficit reduction<\/strong><\/strong><\/h2>\n\n\n\n

The 15% corporate minimum tax applies only to corporations with an average annual financial statement income of $1 billion or more \u2013 there are lots of nuances involved<\/u><\/a>; you can read more details here<\/u><\/a> \u2013 so it will not immediately hit all<\/u><\/a> of the 55 companies on the Institute on Taxation and Economic Policy\u2019s 2021 list.<\/p>\n\n\n\n

It would be fair for Biden to invoke the minimum tax as an asset in battling the deficit this year and in the future. Matthew Gardner<\/u><\/a>, a senior fellow at the institute, pointed out in a Thursday email that the government\u2019s nonpartisan Joint Committee on Taxation has estimated<\/u><\/a> that the tax will bring down the deficit by about $34.7 billion in the 2023 fiscal year (and a total of about $222.2 billion through the 2031 fiscal year). Gardner said that since the minimum tax is the biggest tax hike in the Inflation Reduction Act, \u201cit makes sense that this is the first specific policy the President would point to in explaining the administration\u2019s deficit reduction successes.\u201d<\/p>\n\n\n\n

Gardner also said, however, that \u201cthe first fiscal year in which we\u2019ll see a direct revenue boost from the new minimum tax is fiscal 2023\u201d and that the tax \u201cshouldn\u2019t have had any effect at all in fiscal year 2022.\u201d<\/p>\n\n\n\n

Reuven Avi-Yonah<\/u><\/a>, a University of Michigan law professor and a corporate taxation expert who had advocated a minimum tax<\/u><\/a>, said in an email that Biden probably meant that tax will significantly reduce the deficit going forward. \u201cOf course it is true that no actual revenue will come in until 2023,\u201d Avi-Yonah said, but the tax \u201cdoes contribute to reducing the deficit over the ten year budget window\u201d used by the federal government, which runs from the 2022 to 2031 fiscal years.<\/p>\n\n\n\n

Nonetheless, the president explicitly said in a prepared speech, with emphasis, that the minimum tax was the reason he was able to cut the deficit by $1.7 trillion over the previous two years. That\u2019s inaccurate.<\/p>\n\n\n\n

\u201cIt would take a time machine for a policy implemented in 2023 to reduce deficits in 2021 and 2022,\u201d said Brian Riedl<\/u><\/a>, a senior fellow at the Manhattan Institute, a conservative think tank.<\/p>\n\n\n\n

Why the deficit fell<\/strong><\/strong><\/h2>\n\n\n\n

The primary reason for the deficit falling by $1.7 trillion under Biden was that the deficit had skyrocketed to a record high of about $3.1 trillion<\/u><\/a> in fiscal 2020 during the early stage of the pandemic under then-President Donald Trump. The increase happened largely because of temporary, bipartisan pandemic spending. After much of the temporary spending expired on schedule, the deficit plummeted to about $1.4 trillion<\/u><\/a> in fiscal 2022 under Biden.<\/p>\n\n\n\n

Biden can reasonably take credit<\/u><\/a> for stimulating the US economic recovery, which pushed the deficit downward by boosting tax revenues in fiscal 2021 and fiscal 2022. But Biden\u2019s list of policy initiatives \u2013 including a pandemic relief law<\/u><\/a>, a bipartisan infrastructure law<\/u><\/a>, a bipartisan law to spur semiconductor manufacturing<\/u><\/a>, a boost<\/u><\/a> to food stamp benefits and an extension<\/u><\/a> of the Trump-era pandemic pause on federal student loan repayments \u2013 have, on the whole, made deficits higher, not lower, even when you factor in the deficit-reducing impact<\/u><\/a> of Biden\u2019s signature Inflation Reduction Act.<\/p>\n\n\n\n

MacGuineas said Thursday that although Biden can rightly say that the Inflation Reduction Act will reduce deficits by $240 billion over a decade, that reduction offsets only a \u201csmall fraction\u201d of the\u00a0trillions in new borrowing<\/u><\/a>\u00a0Biden has approved to date. And Dan White, until recently senior director at Moody\u2019s Analytics, an economic research firm whose analysis Biden has repeatedly\u00a0touted<\/u><\/a>\u00a0in his speeches, said in an email last year: \u201cThe actions of the administration and Congress have undoubtedly resulted in higher deficits, not smaller ones.<\/p>\n\n\n\n

<\/p>\n\n\n\n

edition<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

President Joe Biden falsely said on Wednesday that his new corporate minimum tax is the reason the federal budget deficit declined in 2021 and 2022. In reality, that tax didn\u2019t even come into effect until the beginning of 2023. Biden has repeatedly taken credit for reducing the deficit in 2021 and 2022 even though experts have said that […]<\/p>\n","protected":false},"author":6,"featured_media":7994,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1155,1154],"tags":[3806,3084,1169,1780,2074,1252,3023],"class_list":["post-7993","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-trending","tag-3806","tag-3084","tag-biden","tag-deficit","tag-economy","tag-inflation","tag-taxes"],"_links":{"self":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/7993","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7993"}],"version-history":[{"count":1,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/7993\/revisions"}],"predecessor-version":[{"id":7995,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/7993\/revisions\/7995"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/media\/7994"}],"wp:attachment":[{"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7993"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7993"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7993"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}