ICYMI: REUTERS: EVEN AFTER BIDEN TAX HIKE, U.S. FIRMS WOULD PAY LESS THAN FOREIGN RIVALS
Reuters: “The analysis undercuts arguments by some company executives and trade groups that Biden’s plan would leave U.S. firms paying some of the world’s highest taxes and struggling to compete against foreign rivals.”
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 American Jobs and Families Plans — once-in-a-generation investments in infrastructure, clean energy, and caregiving — would be paid for by ensuring that corporations pay their fair share in taxes. A new Reuters analysis found that even under the president’s plan, U.S. companies would likely pay less income tax than their competitors overseas. Read the article here.
Key Points from the Reuters Analysis:
- U.S. companies pay less income tax than their overseas competitors and would likely continue to do so under a tax hike proposed by President Joe Biden, according to a Reuters analysis of filings by hundreds of U.S. and international firms.
- The analysis undercuts arguments by some company executives and trade groups that Biden’s plan would leave U.S. firms paying some of the world’s highest taxes and struggling to compete against foreign rivals.
- […] even if U.S. companies collectively sustain a bigger tax hit than foreseen, they would still be well-placed to compete, the analysis shows. On average, the 52 U.S.-based companies examined by Reuters had profit margins of 24%, well above than the average margin of 14% among their 200 foreign competitors.
The analysis further disproves arguments from critics trying to stop the investments in the American Jobs and Families Plans who argue that raising the corporate tax rate would prevent growth when, in fact, the opposite is true:
- History shows no link between economic growth and the corporate tax rate:
- 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.
Evidence suggests that raising the corporate tax rate will boost productivity and wage growth and bolster the economic recovery.
“Since World War II, productivity and wage growth in the U.S. economy have been significantly greater in periods with higher corporate tax rates.”
“Raising corporate taxes by a modest amount will not undermine the economic recovery and, in fact, using those revenues to finance needed investments will help make the economy stronger.”