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How Dems’ spending bill hammers Americans with billions in new taxes

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Tax experts are still trying to work out exactly what the so-called Inflation Reduction Act — a 755-page patchwork of giveaways, carveouts, and subsidies which purports to ease inflation by reducing the deficit and hiking taxes — will cost average Americans.

However, they agree on one thing: It’s likely to be a lot.

“Everyone is facing slightly less after-tax income in the long run,” Garrett Watson, a senior policy analyst and modeling manager at the Tax Foundation, told The Post.

The biggest reason for the confusion: The bill has yet to be scored in its entirety by the Congressional Budget Office — the nonpartisan agency that typically gives each piece of legislation a price tag before it is voted on. But the Inflation Reduction Act, a slimmed-down iteration of President Biden’s earlier multi-trillion-dollar Build Back Better proposal, came together so quickly it has yet to be fully analyzed.

“This is the world’s largest last-minute term paper,” James Lucier, managing director at Washington-based policy research firm Capital Alpha, told The Post Monday. “No one knows if the numbers add up and a lot of people aren’t even sure what’s in it anymore.”

“We’re still updating our modeling with how the bill has changed over the last few days,” Watson agreed. “The fact that there are so many last-minute changes to amendments makes it hard to keep track, for tax experts and everyday Americans.”

Tax experts are still trying to work out exactly what the so-called Inflation Reduction Act — a 755-page patchwork of giveaways, carveouts, and subsidies which purports to ease inflation by reducing the deficit and hiking taxes — will cost average Americans.

Sen. Chuck Schumer’s bill has yet to be scored in its entirety by the Congressional Budget Office.
MICHAEL REYNOLDS/EPA-EFE/Shutter

While the CBO is still crunching the numbers on the $740 billion energy and health care spending bill, they have made one thing clear: The legislation will have a “negligible” effect on inflation — the very problem it supposedly tackles — in at least 2022 and 2023.

“The real damage here is through this incredibly haphazard legislation: Passing massive bills without the usual quality control process, without committee hearings, without any of the things that really create quality legislation that can last a long time,” Lucier added.

Bernie Sanders
Bernie Sanders has slammed the “so-called” Inflation Reduction Act saying it will have “a minimal impact on inflation.”
Los Angeles Times via Getty Imag

While Americans wait to see just how badly the bill — which the House is expected to pass and send to President Biden sometime Friday — will beat up their wallets, Americans for Tax Reform has compiled a list of the biggest costs to families based on a combination of data from the CBO and Congress’ Joint Committee on Taxation.

They include:

  • A $6.5 billion regressive tax on American energy companies that will be passed on to families in the form of higher energy costs — and could hike the average household’s natural gas bill by 17%.
  • A 16.4 cent-per-barrel tax on imported crude oil and petroleum products that will be passed on to families looking to fill up their car with gasoline — amounting to a $12 billion tax on purchasers of oil or gas products.
  • An increased tax rate on mined coal, which is supposed to bring in an extra $1.2 billion, and will also raise the cost of families’ energy bills. The levy on subsurface-mined coal will jump from 50 cents per ton to $1.10 per ton. Surface-mined coal will be taxed at 55 cents per ton instead of 25 cents per ton.
  • A new 15% tax on corporations reporting at least $1 billion in profits to shareholders, known as “book value.” Democrats say it will raise an estimated $313 billion, but critics say the tax will also be passed on to Americans in the form of higher prices, less hiring, and wage cuts.
  • The $124 billion stock buyback tax, which will likely mean 401(k)s, IRAs and pensions shrink for most Americans — given retirement accounts make up nearly 37% of the $22.8 trillion stock market.
  • $80 billion thrown at the IRS to help the agency collect under-reported income is supposed to return $124 billion to the federal government, but will end up targeting small business owners. Between 78% and 90% of the estimated additional $200 billion the IRS will collect will come from Americans making less than $200,000 annually, according to the Joint Committee on Taxation.
  • A 95% excise tax on drugmakers that could cost more than $1 trillion over the next decade by decreasing the development and introduction of new drugs.
  • $52 billion that will be raised as part of a tax increase on businesses not subject to the corporate income tax, which will hurt mid-sized and family companies.

Even though legislation can be thrown together quickly, the reverberations of these tax hikes are expected to be felt for a while, with Watson even predicting full implementation of the law would take “a couple of years.”

“For instance this minimum book tax will require a lot of regulation to apply it to corporations that have question about every nook and cranny of the law,” Watson said. “This is far from over.”

“We can’t afford to go through a process like this again,” Lucier added. “A mess like this damages the reputation of Congress as a legislative body. This is not the way the system is supposed to work.”

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China Says It Will Do More to Vaccinate Older People Against Covid

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Faced with growing social unrest over its tough pandemic measures, China said on Tuesday it would ramp up vaccination of its oldest citizens, a move that experts have argued is crucial if the world’s second largest economy is to ease Covid measures and reopen its economy.

Authorities will bring vaccines to people in nursing homes, go door-to-door, use mobile vaccination stations and press those who are reluctant to give a reason, according to a statement from the National Health Commission. About 90 percent of China’s total population is fully vaccinated, but among those 80 and older, the number is much lower — 65.8 percent are fully vaccinated, and only 40 percent have received a booster.

“It is necessary to speed up vaccination, especially the vaccination of the elderly,” said Xia Gang, a National Health Commission official in charge of vaccination. “I hope that elderly friends will actively complete the vaccination as soon as possible to protect the health of themselves and their families.”

The new initiative was made public ahead of a news conference with officials from China’s top health bodies on Tuesday afternoon. News of the briefing prompted rumors that authorities were considering easing testing and isolation requirements, stoking optimism in Asian financial markets that China was ready to make a bigger move away from its “zero Covid” rules. Despite no signs of a broader shift, investors appeared to be relieved that Chinese officials were making any effort.

Hong Kong’s market finished 5 percent higher, while in Shanghai and Shenzhen, stocks rose more than 2 percent.

Similar optimism fueled a rally in Chinese stocks earlier this month when investors on Wall Street made a bet that China would loosen its measures amid growing economic pain. That positive sentiment remained as China’s National Health Commission issued a flurry of small changes aimed at narrowing the scope of the country’s vast and intrusive pandemic apparatus.

But in the weeks since, it became clear that these measures would not amount to a broader shift in the “zero Covid” policy, and fears about the effect on the global economy have grown.

China faces a predicament: Its top leadership recognizes that a blanket approach to controlling the virus is taking an increasingly large economic and social toll, but leaders are worried that widespread infections will overwhelm a rickety health care system.

The pressures have become more acute in recent days, with people across China taking to the streets in a rare show of public protest against tough Covid lockdowns.

Chinese officials regularly point to the country’s vulnerable population — the old and very young — as a primary reason for why the country cannot afford to ease up.

China’s top leader, Xi Jinping, most recently called the “zero Covid” approach an “all out people’s war to stop the spread of the virus,” that has put “the people and their lives above all else.”

Joy Dong contributed to reporting from Hong Kong.

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US steps up pressure on European allies to harden China stance

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The US is pushing its European allies to take a harder stance towards Beijing as it tries to leverage its position on Ukraine to gain more support from Nato countries for its efforts to counter China in the Indo-Pacific.

According to people briefed on conversations between the US and its Nato allies, Washington has in recent weeks lobbied members of the transatlantic alliance to toughen up their language on China and to start working on concrete action to restrain Beijing.

US president Joe Biden identified countering China as his main foreign policy goal at the start of his administration, but his efforts have been complicated by the focus on Russia’s invasion of Ukraine in February.

But with Russian president Vladimir Putin’s invasion in its 10th month, Washington was making a concerted effort to push China back up Nato’s agenda, the people said.

They said the US was trying to leverage the action it had been taking on Ukraine — including being the largest supplier of weapons and aid for Kyiv — into more concrete support for its policies in the Indo-Pacific region.

“The shift from the Americans on this has been noticeable,” said one of the people, all of whom declined to be identified given the sensitivity of the matter. “It’s really quite clear that they have decided now is the time to move on this.”

Asked about the push, a senior US official noted that Nato agreed on a new “strategic concept” in June that “addressed the systemic challenges” posed by China. “Our conversations on these issues continue,” the official added.

Referring to the 30 Nato allies endorsing the new concept at a summit in Madrid in June, a US state department official said Nato foreign ministers would “address ways to strengthen our resilience and the challenges posed by the PRC [People’s Republic of China]” at their ministerial meeting in Bucharest, Romania, this week.

“We deeply value and encourage a united European approach to China,” the official added.

Coordinating Nato members’ approaches to China is high on the list of topics to be discussed at the two-day meeting, which starts on Tuesday.

“What we have begun doing across the Nato alliance is to think about ways in which the alliance can address that challenge [from China] in concrete terms,” Julianne Smith, US ambassador to Nato, said on Monday.

“Allies [will] look to implement what they signed up to,” she added, “to move from what we call assessing the problem to addressing the problem.”

The ministers will discuss a new report on China, designed to harden the stance of the alliance, which in June identified Beijing as a “challenge” to its “interests, security and values” for the first time.

The report would address China’s military development, its efforts to exert influence on Nato members and third countries, and Beijing’s relationship with Moscow, officials said.

But many European allies are anxious the discussions might distract from what they view as the more pressing need to cement unwavering support for Ukraine.

In addition, while the EU is also assessing ways to toughen up its trade relations with China, the vast majority of Nato countries including Germany and France are reluctant to fully align their China postures with that of Washington.

“Let’s say that the United States has a certain tendency to be prescriptive, not just on China but about everything,” said a senior EU official, who suggested Europe would ultimately align closer to the US position. “Will we become, let’s say, completely isolated and in the middle between China and the United States? I don’t think so.”

While Russia’s full-scale invasion of Ukraine has forced the White House to step up its commitment to European defence, the US has made clear that this is a temporary respite from a long-term shift to countering China as its main strategic defence and security policy.

Last month, the Biden administration released its national security strategy, which made clear that China was the security priority over Russia, despite the latter’s “immediate and ongoing” threat.

Canada on Sunday announced its first Indo-Pacific strategy, outlining new spending to deal with a “disruptive” China.

Nato secretary-general Jens Stoltenberg said last week that Beijing was “not an adversary” but stressed the alliance had to respond to China’s military modernisation, collaboration with Russia and attempts to “control critical infrastructure in Europe”.

“So all of this makes it necessary for allies to address this together,” he told reporters. “And that’s exactly what we will do when we meet in Bucharest.”

Additional reporting by Felicia Schwartz in Washington

Follow Henry Foy and Demetri Sevastopulo on Twitter



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Proud, Scared and Conflicted. What the China Protesters Told Me.

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They went to their first demonstrations. They chanted their first protest slogans. They had their first encounters with the police.

Then they went home, shivering in disbelief at how they had challenged the most powerful authoritarian government in the world and the most iron-fisted leader China has seen in decades.

Young Chinese are protesting the country’s harsh “zero-Covid” policy and even urging its top leader, Xi Jinping, to step down. It’s something China hasn’t seen since 1989, when the ruling Communist Party brutally cracked down on the pro-democracy demonstrators, mostly college students. No matter what happens in the days and weeks ahead, the young protesters presented a new threat to the rule of Mr. Xi, who has eliminated his political opponents and cracked down on any voice that challenges his rule.

Such public dissent was unimaginable until a few days ago. These same young people, when they mentioned Mr. Xi online, used euphemisms like “X,” “he” or “that person,” afraid to even utter the president’s name. They put up with whatever the government put them through: harsh pandemic restrictions, high unemployment rates, fewer books available to read, movies to watch and games to play.

Then something cracked.

After nearly three long years of “zero Covid,” which has turned into a political campaign for Mr. Xi, China’s future looks increasingly bleak. The economy is in its worst shape in decades. Mr. Xi’s foreign policy has antagonized many countries. His censorship policy, in addition to quashing challenges to his authority, has killed nearly all fun.

As a popular Weibo post put it, Chinese people are getting by with books published 20 years ago, music released a decade ago, travel photos from five years ago, income earned last year, frozen dumplings from a lockdown three months ago, Covid tests from yesterday, and a freshly baked Soviet joke from today.

“I think all of these have reached a tipping point,” said Miranda, a journalist in Shanghai who participated in the protest on Saturday evening. “If you don’t do anything about it, you could really explode.”

In the last few days, in interviews with more than a dozen young people who protested in Shanghai, Beijing, Nanjing, Chengdu, Guangzhou and Wuhan, I heard of a burst of pent-up anger and frustration with how the government implements “zero Covid.” But their anger and despair goes beyond that, all the way to questioning the rule of Mr. Xi.

Two of these people said that they don’t plan to have children, a new way to protest among young Chinese at a time when Beijing is encouraging more births. At least four of the protesters said that they were planning to emigrate. One of them refused to look for a job after being laid off by a video-game company in the aftermath of a government crackdown on the industry last year.

They went to the protests because they wanted to let the government know how they felt about being tested constantly, locked inside their apartments or kept away from family and friends in the Covid dragnet. And they wanted to show solidarity for fellow protesters.

They are members of a generation known as Mr. Xi’s children, the nationalistic “little pinks” who defend China on Weibo, Facebook and Twitter. The protesters represent a small percentage of Chinese in their 20s and early 30s. By standing up to the government, they defied the perception of their generation. Some older Chinese people said that the protesters made them feel more hopeful about the country’s future.

Zhang Wenmin, a former investigative journalist known under her pen name Jiang Xue, wrote on Twitter that she was moved to tears by the bravery of the protesters. “It’s hard for people who haven’t lived in China in the past three to four years to imagine how much fear these people had to overcome to take to the streets, to shout, ‘Give me liberty, or give me death,’” she wrote. “Amazing. Love you all!”

As first time marchers, most of them did not know what to expect. A Beijing protester said that she was so tense that she felt physically and emotionally exhausted the next day. More than one person told me that they needed a day to collect their thoughts before they could talk. At least three cried in our interviews.

They are proud, scared and conflicted about their experiences. They have different views about how politically explicit their slogans should be, but they all said that they found shouting the slogans cathartic.

Miranda, who has been a journalist for eight years, said that she couldn’t stop crying when she shouted with the crowd, “freedom of speech” and “freedom of press.” “It was the freest moment since I became a journalist,” she said, her voice cracking.

All the people I interviewed asked me to use only their first name, family name or English name to protect their safety. They had felt a relative safety when marching with others just days earlier, but none dared to put their name to comments that would be published.

The slogans that they recalled chanting were all over the place, illustrating the wide frustration with their lives. “End the lockdown!” “Freedom of speech!” “Give back my movies!”

Quite a few of them were taken aback by how political the Saturday protest in Shanghai turned out to be.

They were equally surprised, if not more, when more people returned on Sunday to request the release of protesters who had been detained hours earlier.

All six Shanghai protesters I spoke with thought that they were going to a vigil on Saturday evening for the 10 victims who died in a fire Thursday in Urumqi, the capital of the Xinjiang region in China’s west. In the beginning, the atmosphere was relaxed.

When someone first chanted, “No more Communist Party,” the crowd laughed, according to Serena, a college student who is spending her gap year in Shanghai. “Everyone knew it was the redline,” she said.

Then it became increasingly charged. When someone yelled, “Xi Jinping, step down!” and “C.C.P., step down!” the shouts were the loudest, according to Serena and other protesters who were also there.

In Beijing, a marketing professional in her mid-20s with the surname Wu told her fellow protesters not to shout those politically explicit slogans because that would guarantee a crackdown. Instead, she shouted slogans that urged the government to implement the rule of law and release detained Shanghai protesters.

A protester in Chengdu and one in Guangzhou, separated by 1,000 miles, both said that they were stopped from shouting slogans that other demonstrators deemed too political and were told to stick to the Covid-related demands.

For many of them, this weekend was their first brush with the police. A protester named Xiaoli in Chengdu said that she had never seen so many police in her life. After being chased by them, she said that she could hear her heart beating fast when she passed by officers on her way home.

It was clear that many protesters blame Mr. Xi for the extremely unpopular “zero-Covid” policy. A young Shanghai professional with the surname Zhang said that Mr. Xi’s norm-breaking third term, secured at last month’s party congress, spelled the end of China’s progress. “We all gave up our illusions,” he said.

He cried when he mentioned an old man’s question during this year’s Shanghai lockdown, “Why has our country come to this?” Mr. Zhang, who said that he grew up poor in a village, was grateful for the government’s assistance in his education. “I thought we would only move upward,” he added.

The young protesters are most conflicted about the impact of their actions. They felt powerless about changing the system as long as Mr. Xi and the Communist Party are in power. They believe that many people in the public supported them because the unyielding Covid rules have violated what they see as baseline norms of Chinese society. Once the government relaxes the policy, they worry, the public’s support for protests would evaporate.

At the same time, some of them argued that their protests would make the public aware of their rights.

No one knows what the protests will become — a moment in history, or a footnote. The official state media has kept quiet, though some pro-government social media bloggers have pointed fingers at “foreign forces.” Police have enhanced their presence on the streets and called or visited protesters in an attempt to intimidate them.

I asked Bruce, a Shanghai finance worker in his 20s, whether the protests meant that people have changed their view of Mr. Xi. He responded, “It was probably not because the public’s opinion of him changed, but because those who are critical of him have spoken up.”

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