Kevin Brady calls Biden tax hikes 'a major economic blunder,' blames labor shortage on benefits

U.S. Representative Kevin Brady (R-Tex.) predicts President Biden could make a big mistake that hurts American workers. 

"I think it's a major economic blunder to raise taxes on job creators, as we're urging them to hire more Americans, and do it in a way that both hurts working families and drives U.S. jobs overseas," he told Yahoo Finance Live.

Brady is the ranking member of the House Committee on Ways and Means but he was chairman when the Trump administration passed the historic 2017 Tax Cuts and Jobs Act, which cut the corporate tax rate to 21%. Biden wants to raise the corporate tax rate and reverse some of the other tax cuts to help pay for his multi-trillion dollar American Jobs Plan.

"We are confident that the investments and tax proposals in the Jobs Plan, taken as a package, will enhance the net profitability of our corporations and improve their global competitiveness," U.S. Treasury Secretary Janet Yellen told the U.S. Chamber of Commerce.  

Brady disagrees. "I think we need to be smart [about] how we get people back to work. I worry that some of these policies actually undermine or sabotage our jobs recovery."

He dismisses critics, including the Congressional Budget Office, who say the Trump tax cuts created huge deficits. "What we do know is if you reverse those tax cuts, you see the opposite. You see flatter paychecks, more jobs moving overseas, slower jobs growth going forward," he said.

'Paid more to stay home'

Brady and other Republicans blame federal unemployment benefits for creating a labor shortage and a barrier to get people back to work. "They are so generous in America today, four out of 10 Americans are being paid more to stay home than to go back to work," he said.

U.S. job growth for the month of April fell far below what experts had predicted.

Democrats are paying 4 in 10 jobless more to stay home than to return to work.

Businesses – both small and large – can't find the workers they need. https://t.co/fkpjzpDur7

— Ways and Means GOP (@WaysandMeansGOP) May 7, 2021

Those benefits expire in September. But Brady applauds the more than 20 states that have already canceled federal unemployment insurance for their out-of-work citizens because he says, "Many of them can get better health care by not working, than returning to work. All of that is creating, I think the wrong incentives."

'We saw innocent people killed'

Brady plans to retire after more than two decades in Congress when his term concludes next year. After Trump supporters violently stormed the U.S. Capitol on Jan. 6, Brady joined Republicans who tweeted their praise for the Capitol Police. "Their heroism was on full display as they protected the Capitol against mob violence."

But Brady has not decided if he will support a bipartisan investigation of the attack on the Capitol. He compares it to protests against racism that took place in other parts of the country last year.  

"We saw innocent people killed in those lootings and violence. Certainly, we shouldn't ignore that. And if Congress is going to look, take a look to see how we should prepare, not just the Capitol, but across the country, I think that should be part of the discussion," he said. 

Brady stressed his retirement has nothing to do with losing faith in Congress. "I'm pretty optimistic. I haven't seen a problem yet in Congress, that can't be solved, not one," he said.

Adam Shapiro is co-anchor of Yahoo Finance Live 3pm to 5pm. Follow him on Twitter @Ajshaps

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