The Treasury Department on Wednesday released a report detailing President Biden’s proposals to increase corporate taxes to fund infrastructure investments, The Hill reported. Department officials said the proposals would raise about $2.5 trillion over 15 years and fully offset the cost of the new infrastructure spending. During a call with reporters, Treasury Secretary Janet Yellen argued that the plan will be beneficial for both the federal government and businesses. “Tax reform is not a zero-sum game, with corporations on one side and government on the other. There are policies that are mutually beneficial,” Yellen said. “Win-win is a very overused phrase, but we have a real one in front of us now.” Biden last week released a $2.25 trillion infrastructure plan that would be paid for over 15 years through corporate tax changes, including an increase in the corporate rate from 21 percent to 28 percent. The plan has quickly faced opposition from Republicans and business groups, who argue it will make the U.S. business climate less competitive. It will need widespread support from congressional Democrats to be enacted, given that Democrats only narrowly control the House and Senate. Read more.
In related news, 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), The Hill reported. NAM, in a study conducted 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. 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. Read more.