Biden’s Proposed Tax Hike - The Conservative Perspective

President Biden is pushing a $1.9 trillion COVID-19 spending package which he claims will boost the economy. But a new study warns that one other key policy Biden has proposed would hurt the economy and have at least three major consequences for workers.

The president wants to raise the corporate tax rate from 21 percent to 28 percent. He argues that this is about making Big Business “pay it’s fair share” and raising revenue the government can use to help people.

Yet a recently-released report from the right-leaning Tax Foundation concludes that this would make the US corporate tax rate, federal and state combined, a whopping 32 percent, the highest among developed countries. The tax experts warn that this policy change would “harm U.S. economic competitiveness and increase the cost of investment in America.” As a result, the researchers found that Biden’s proposed corporate tax hike would shrink the overall size of the economy, reduce wages, and eliminate 159,000 jobs.Researchers found that Biden’s proposed corporate tax hike would shrink the overall size of the economy, reduce wages, and eliminate 159,000 jobs

“President Biden’s proposed tax hike would reduce American economic output during a time when we need to maximize economic growth to reach our country’s pre-pandemic growth trend and return to full employment,” the report concludes.

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The Context: Corporate Taxes Are Notoriously Harmful for the Economy

As the Tax Foundation notes, economists widely consider corporate taxes one of the most economically harmful forms of taxation, because they decrease business investment and the costs are largely passed on to workers and consumers. 

“The elementary fact is that ‘business’ does not and cannot pay taxes,” Nobel Prize-winning free-market economist Milton Friedman once explained. “Only people can pay taxes. Corporate officials may sign the check, but the money that they forward to Internal Revenue comes from the corporation’s employees, customers or stockholders.”

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