Politics Business group's study says corporate tax hike would cost 1M jobs
Louisiana Legislature prepares to enter tax-heavy session
"Tax reform" means different things to different people, but a lot of people across the political spectrum seem to think Louisiana needs it. © Provided by Washington Examiner As usual during odd-numbered years, the regular legislative session that starts Monday is focused on taxes and spending, though lawmakers can propose up to five nonfiscal bills each. Gov. John Bel Edwards, who saw his own attempt at a comprehensive tax overhaul rebuffed in 2017, did not include any tax measures in his legislative agenda.
One million jobs would be lost in the first two years if the corporate tax rate increased to 28 percent and other policies went into effect, according to a new study from the National Association of Manufacturers (NAM).
NAM, in aconducted by Rice University economists, calculated the impact of increasing the corporate tax rate to 28 percent, increasing the top marginal tax rate, repealing the 20 percent pass-through deduction, and eliminating certain expensing provisions.
Biden's proposed $2.25 trillion infrastructure package would increase the corporate tax rate to 28 percent and establish a minimum global tax. The 2017 GOP tax law lowered the corporate tax rate from 35 percent to 21 percent.
Biden's plan to overhaul tax code would close offshore tax loopholes
At least 55 of the United States' biggest companies paid nothing in federal taxes for 2020, despite earning a collective $40.5 billion in pretax income. To address these kinds of discrepancies, the president’s plan would impose a minimum tax of 15 percent on firms with income of more than $2 billion and what the Treasury called “large discrepancies between income reported to shareholders and that reported to the IRS.” This minimum tax would affect, the agency estimated, fewer than four dozen companies.
The NAM study found that global domestic product (GDP) would be down by $117 billion by 2023, $190 billion in 2026, and by $119 billion in 2031.
"[T]his study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: increasing the tax burden on companies in America means fewer American jobs. One million jobs would be lost in the first two years, to be exact," NAM President and CEO Jay Timmons said in a statement.
It also calculated that ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023, $83 billion less in 2026, and and $66 billion less in 2031.
It touted the growth from the 2017 GOP tax law, including that manufacturing added 263,000 new jobs in 2018 and that manufacturing wages increased by 3 percent in 2018 and continued going up.
What Matters: Taxes will have to go up for someone
The US is entering a weird place where even some big money execs -- the kinds of people who usually build businesses by doing everything they can to avoid paying federal taxes -- agree the government needs to raise funds to keep things rolling. © shutterstock Now, like a family with a calculator at the kitchen table going over its bills, American policymakers and business leaders are slowly coming around to the most obvious mathematical truth: Companies will need to shell out funds if they want the government to invest in President Joe Biden's goal of bringing the nation's infrastructure up to scratch.
NAM last weeksupport for Biden's plan, just not the way Biden wants to pay for it.
"Achieving our shared goals will be the result of debate, discussion and collaboration with the administration and both parties in Congress," Timmons said at the time.
Another recent, conducted by the Penn Wharton Budget Model, found that corporate tax proposals in Biden's infrastructure plan would raise revenues by $2.1 trillion over 10 years. It also said its revenue estimate of the tax proposals is at the lower end of what might be raised from the plan, since some of the proposals lacked enough detail for the researchers to model.
The White House has said that this is the beginning of the process and negotiations are just getting started, with Biden indicating he's open to other ideas to pay for the plan.
"We have to move now. Because I am convinced that if we act now, in 50 years people are going to look back and say, this was the moment that America won the future," the president said whenin Pittsburgh.
Democrats offer competing tax ideas on Biden infrastructure .
Congressional Democrats are debating how they should raise taxes to finance President Biden's infrastructure plan, with minor disagreements emerging in the early stages.The White House has proposed raising the corporate tax rate from 21 percent to 28 percent and increasing taxes on U.S. companies' foreign earnings. But some Democratic lawmakers are pushing back on aspects of the tax proposals, while others have suggested ideas that diverge from the administration's plans. Reaching consensus on taxes will be among the top challenges for Democrats as they work to enact an infrastructure and jobs package in the coming months.