President Joe Biden has recently been defending higher U.S. corporate income taxes.
President Trump lowered the corporate tax rate from 35 percent to 21 percent during his term in office. Now Biden seeks to raise it to 28 percent.
Republicans contend that much of Biden’s infrastructure plan does not pay for infrastructure.
Biden, on the other hand, contends that improving infrastructure is important for U.S. competitiveness and that the raised corporate income tax will not cause companies to leave the countries.
Meanwhile, Treasury Secretary Janet Yellen has called for a global minimum corporate tax of 21 percent to keep countries from fleeing to less heavily taxed countries.
Raising the corporate tax rate will indeed cause U.S.-based companies to look toward other countries in which to domicile.
It is simple economics that increasing corporate taxes will lead to companies leaving the United States. Biden’s plan erodes the reasons why American companies choose to stay in the United States.
According to Caroline L. Harris of the U.S. Chamber of Commerce:
“Corporate income taxes are the most harmful for economic growth. Further, the burden of corporate taxes falls most heavily on workers. High corporate tax rates divert investment away from the corporate sector, curtailing investment that would raise the productivity of American workers and increase those workers’ real wages. Studies estimate that labor likely bears about 70% of the burden of the corporate income tax.”
So it is not the wealthy alone who would be harmed by a corporate income tax hike. Common workers could face reduced wages or even unemployment from Biden’s plan.
Furthermore, all Americans who own stocks in companies would be harmed by an increased corporate income tax.
As far as Janet Yellen’s plan to set a minimum global corporate income tax at 21 percent, it is both statist and internationalist in the bad sense.
Countries like Ireland, with a low corporate income tax of 12.5 percent, should be allowed to prosper rather than being forced to raise their corporate income taxes.
Former President Trump was right to seek and get a much lower corporate income tax — 35 percent was too high and his proposal to lower it was the right one.
Trump generally stood for the right things and got this country’s economy prospering before the coronavirus hit.
Economic growth, worker incomes, productivity, stock ownership and companies leaving the U.S. are all side effects of Biden’s plan to raise corporate income taxes.
While infrastructure needs to be addressed, the negatives outweigh the positives in Biden’s plan.
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