Casey Harper (The Center Square).
A new analysis of President Joe Biden’s tax plan raises concerns about its impact on the economy both now and in the future.
American Enterprise Institute published a Report Wednesday analyzing Biden’s proposed corporate tax increases, saying it will reduce the incentive to invest in the U.S. for years down the road.
“Corporate tax policies vary significantly among developed countries,” said Kyle Pomerleau, a tax expert at AEI. “In addition to differences in statutory corporate income tax rates, there are significant differences in corporate tax bases. Certain countries offer tax advantages for income or assets, and they place low taxes on investment and income. Other countries provide smaller specific benefits for certain types of income and activity and place higher tax burdens on corporate investment.”
The report argues that including corporate tax hikes in the Democrats’ $3.5 trillion reconciliation bill would make the U.S. less competitive on the world stage and could harm economic growth.
RELATED: Joe Biden’s Economy: Gas, Food Prices Soaring, Supply Chain SNAFU’s, And Looming ‘Stagflation’
“Current proposals to reform U.S. corporate taxation would increase the statutory and effective tax rates to well above OECD averages,” the report said. “The Biden proposal, which would raise the federal corporate tax rate to 28 percent, would increase the combined statutory corporate income tax rate to 32.3 percent, which would be the second highest in the OECD. The METR and AETR on new investment would also become the second highest in the OECD.”
According to the report, the House Democrats’ similar proposal would also place the U.S. near the top of the corporate tax rate list among the OECD, the Organisation for Economic Cooperation and Development, which includes 38 member countries.
Support Conservative Voices!
Get the most recent news by signing upGet political news, insights, and commentary directly delivered to your email inbox
“The House proposal, which was approved by the House Ways and Means Committee on September 15, 2021, would increase the corporate tax rate to 26.5 percent. Under this proposal, the combined US statutory corporate income tax rate would be 30.9 percent, the third highest in the OECD,” the report said. “The METR on corporate investment would rise to 22.4 percent, which would be the third highest in the OECD, and the AETR would rise to 28 percent, which would be the second highest in the OECD”
Corporate investors may be hesitant about investing in areas with high taxes.
“Proposals that raise the statutory corporate tax rate and increase the tax burden on corporate investment will increase the incentive to shift profits and high-return assets into low-tax jurisdictions and reduce the incentive to invest in the United States,” Pomerleau said.
This article was syndicated by permission of The Center Square.