Fact check: Ad says Beasley wants to raise taxes on people making $75,000

In the television ad commissioned by the Senate Leadership Fund, a Republican-backed political action committee, a narrator says Cheri Beasley "backs tax hikes -- even on families making under $75,000.' PolitiFact checks that claim.

Posted 6:23 p.m. Oct 31, 2022 — Updated 8:38 p.m. Oct 31, 2022

Paul Specht

, PolitiFact reporter

A new ad accuses Democratic U.S. Senate candidate Cheri Beasley of wanting to bail out the rich and tax lower- to middle-income families.

Beasley, a former North Carolina Supreme Court chief justice, faces Republican U.S. Rep. Ted Budd in North Carolina’s race to replace retiring Republican Sen. Richard Burr. The contest is expected to be among the nation’s closest Senate races.

In the television ad commissioned by the Senate Leadership Fund, a Republican-backed political action committee, a narrator says:

“It's a question of fairness. Should a waitress be forced to help pay for a doctor’s student loans? Cheri Beasley thinks so. She backs student loan bailouts for the rich — even couples earning a quarter million dollars a year. Who pays? The rest of us. Beasley backs tax hikes — even on families making under $75,000. Cheri Beasley bails out the wealthy and taxes the rest of us.”

The ad appears to reference President Joe Biden’s student loan debt forgiveness plan, albeit through some misleading statements. Under Biden’s plan, which is being challenged in court, some borrowers who earn well above the median household income in America could qualify for Biden’s student loan debt relief. But, as PolitiFact previously reported, the vast majority of the relief is concentrated on borrowers with lower incomes.

But did Beasley really express support for raising taxes on families making less than $75,000 a year?

No. The narrator’s transition from student loan bailouts to tax hikes might make it seem like Biden’s debt relief plan is funded by tax increases. That’s not the case. Small on-screen citations signal the advertiser has shifted topics from Biden’s student bailout plan to Beasley’s support for the Inflation Reduction Act.

The Inflation Reduction Act, though, does not change federal income tax rates for people earning less than $75,000 a year. The legislation may indirectly affect lower-income taxpayers to the tune of less than 1% of their after-tax income — but not through direct taxes. And expert predictions vary on when or how that would happen.

Beasley opposes raising taxes on anyone earning $75,000 or less per year, her campaign said when asked about the ad. Her campaign said the claim had already been debunked, pointing to news articles and fact checks showing that claims about tax hikes in the Inflation Reduction Act have been exaggerated. The campaign highlighted an Associated Press analysis that said: “Nothing in the bill raises taxes on people earning less than $400,000. … There are no individual tax rate increases for anyone in the bill.”

Backing ‘tax hikes’

Beasley has expressed support for the Inflation Reduction Act, tweeting on Aug. 7 that it would help lower costs and that votes against the legislation were “inexcusable.”

To back up the claim about tax hikes in the Inflation Reduction Act, the Senate Leadership Fund pointed to an analysis by the congressional Joint Committee on Taxation. Republican lawmakers have also cited the analysis when making similar statements about the bill. However, the committee’s analysis offers an incomplete picture of the bill’s effects.

The bill, which Biden signed into law in August, only directly levies tax increases on very large corporations and high-earning money managers. Any impact on middle-income taxpayers would be indirect and hard to calculate. Corporations tend to pass along the cost of tax increases through lower returns for investors or lower wages for workers.

The bill could cost taxpayers about 1% of their annual income, the committee’s analysis found.

Households making $75,000 or less would lose 0.5% of their gross income as a result of increased corporate taxes passed on to consumers, or about $350 for someone earning $75,000, the committee found.

However, as PolitiFact has previously reported, the committee’s analysis didn’t examine how the bill would help taxpayers in other ways.

Fact check: Budd says Beasley was 'encouraging' riots after George Floyd's death

The Committee for a Responsible Federal Budget, a nonprofit organization that favors deficit reduction and has been skeptical of some of Biden’s spending plans, reported that healthcare subsidies offered for Affordable Care Act plans “alone would be more than enough to counter net tax increases below $400,000 in the (Joint Committee on Taxation) study.” The group estimated that, by 2027, the Inflation Reduction Act would provide a net tax cut once fully phased-in.

Several groups weighed-in on the bill’s indirect effect on taxpayers, at varying depths and with varying results.

The Tax Foundation also believes the ACA subsidies will offset small tax burden increases for low-income households in the short term. However, when the ACA subsidies expire mid-decade, after-tax incomes would go back down.

“After-tax incomes are up by 0.3% on average in 2023 and 0.2% in 2032, and in the long-run they fall by 0.2% after taking into account the economic impacts,” said Garrett Watson, senior policy analyst and modeling manager at the foundation.

The University of Pennsylvania’s Penn Wharton Budget Model predicted a 0.1% drop in after-tax income for low-income earners.

Experts at the Urban Institute-Brookings Institution Tax Policy Center identified the ACA subsidies as an “important factor” when considering the bill’s overall effect on taxpayers.

Five former Treasury secretaries signed a statement supporting the bill and rejecting the argument that its provisions represent a tax increase, writing: "Taxes due or paid will not increase for any family making less than $400,000 a year.”

Our ruling

The ad says Cheri Beasley “backs tax hikes — even for families making under $75,000” and referenced the Inflation Reduction Act.

Beasley does support the Inflation Reduction Act but the claim is wrong to suggest it includes a change in tax rates for that income bracket. Expert analyses show that any effect on those earners would be on the scale of $350 and, by one estimate, delayed for several years.

The claim has a kernel of truth but ignores critical facts that would give a different impression. We rate it Mostly False.

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