FACT CHECK: CLOSING TAX LOOPHOLES WON’T STIFLE JOB GROWTH DESPITE OPPONENTS’ FALSE CLAIMS 

Moody’s Analytics: Along With The Bipartisan Infrastructure Deal, The Build Back Better Agenda Will Add Nearly 2 Million Jobs Per Year Over The Course Of The Decade

Research Shows that Slashing the Corporate Tax Rate Does Not Spur Economic Growth — But Restoring it Could Boost Productivity and Wage Growth

President Biden’s proposed Build Back Better agenda will create millions of jobs through investments in clean energy, caregiving, education, and more — paid for by rewarding work, not wealth. The plan will eliminate unfair aspects of the tax system like the carried interest loophole, which allows millionaire and billionaire hedge fund managers to pay a lower rate on their work than other working Americans.

But a new, flawed report from the U.S. Chamber of Commerce argues that closing the carried interest loophole and increasing the corporate tax rate will hamper job growth when, in fact, the opposite is true: 

  • The only beneficiaries of carried interest are the 3,000 to 5,000 fund managers who avoid millions in taxes each year because of the loophole. Put simply, the carried interest loophole is nothing more than an unnecessary tax subsidy that flows to the richest one percent of the one percent.

  • History shows no link between economic growth and the corporate tax rate:

    • The United States economy has grown an average rate of 3% every year since 1870, regardless of fluctuations in the corporate income tax rate.

    • A steep corporate tax rate cut in 1986 did nothing to reverse the widening fissure between typical workers’ pay and productivity growth.

  • Slashing the corporate tax rate in 2017 through Republicans’ Tax Cuts and Jobs Act (TCJA) primarily benefited well-off shareholders, not the broader economy or working class Americans.

  • Because of this, according to tax experts, wealthy shareholders that have profited heavily from recent tax cuts would feel the entire short-term impact of raising the corporate tax rate — not middle class Americans.

  • A Congressional Research Service report found that the TCJA’s 21% corporate tax rate did not boost corporate productivity.

  • According to the Economic Policy Institute, the link between profit rates and business investment is historically weak, which weakens the entire ‘tax cuts boost productivity’ argument.

The investments in President Biden’s full Build Back Better agenda will create jobs, lower costs, and lower taxes for working families.

  • The Build Back Better agenda will create millions of jobs: 

  • The Build Back Better agenda will lower taxes for middle class families: 

    • It will expand the Child Tax Credit, lowering taxes for middle class families by providing 39 million households and nearly 90% of children in the U.S. a major tax cut and cutting the child poverty rate in half.

  • The Build Back Better agenda will lower costs for working people:

    • It will lower prescription drug costs for Americans by letting Medicare negotiate drug prices, so consumers are no longer at the whim of pharmaceutical companies.

    • It will lower child care costs — which cost parents $30-35 billion in income before the pandemic. Access to affordable child care could increase the lifetime earnings for women with children by nearly $100,000.

    • It will lower health care costs and premiums for those buying coverage through the ACA by extending the American Rescue Plan’s cost savings; adding dental, vision, and hearing coverage to Medicare; and closing the Medicaid gap for low-income Americans.

    • It will lower education costs by making two years of community college tuition-free and making universal preschool a reality.

###