President Joe Biden is pushing Congress for a higher corporate tax rate to reform the Tax Cuts and Jobs Act of 2017, but some experts are concerned about the impact that would have.
The Tax Foundation analyzed the effects of what would happen if the rate increased from 21 percent to 28 percent and a 15 percent minimum tax “on the book income” for big companies were introduced.
This would be a significant increase from the cuts made as a result of the act, which slashed the corporate tax rate from 35 percent. In fact, the hike would give the U.S. one of the highest corporate tax rates in the world.
While many people brush off corporate tax hikes as not impacting average people, they may be sorely mistaken.
The Tax Foundation estimates that 159,000 jobs would be lost as a result of the hike in the long term, along with wages and economic output taking a slight hit.
— Tax Foundation (@TaxFoundation) March 15, 2021
In addition to raising taxes on corporations, the administration wishes to raise rates on individuals who make more than $400,000 a year.
“If you make under $400,000, you will not pay a penny more in taxes when I’m president,” Biden tweeted back in September.
“The super-wealthy and big corporations will finally pay their fair share — and we’ll invest that money in working families. We’re going to reward work — not wealth.”
If you make under $400,000, you will not pay a penny more in taxes when I'm president.
The super-wealthy and big corporations will finally pay their fair share — and we'll invest that money in working families.
We're going to reward work — not wealth.
— Joe Biden (@JoeBiden) September 17, 2020
Raising taxes that would result in job losses would be damaging for the path toward economic recovery after the coronavirus pandemic.
The latest unemployment rate, 6.2 percent, indicates that more Americans are going back to work, but that number is still relatively high when compared to numbers prior to the pandemic.
Treasury Secretary Janet Yellen suggested earlier this year that Biden wants changes to be made as part of the next economic spending package.
“[Biden] has said that eventually, as part of a larger package that would include significant spending and investment proposals — not now while the pandemic is really depressing the economy — that he would want to repeal parts of the 2017 tax cuts that benefited the highest-income Americans and large companies,” Yellen said in January, according to CNBC.
"If Janet Yellen is all on board except for implementation we are in really good shape," says Senator @ewarren on her proposal for an Ultra-Millionaire Tax. "We learned from some of the mistakes they made in Europe. This version of the wealth tax covers all of your property." pic.twitter.com/NrVDVufOWE
— CNBC (@CNBC) March 2, 2021
Before Biden and Democratic lawmakers take any action, they need to at least wait for the economy to fully reopen in all 50 states.
Although tax hikes for the wealthy and powerful sound good to some on paper, in reality they could do serious damage to the average American worker.