President Biden’s $5.8 trillion budget proposal urges lawmakers to raise the corporate tax rate to 28% — higher than that of many foreign competitors, including China.
Mr. Biden said the hike is needed to meet the White House’s goal of reducing the federal deficit by more than $1 trillion.
“My administration is on track to reduce the federal deficit by more than $1.3 trillion this year,” Mr. Biden said. “My budget will continue that progress, further reducing the deficit by continuing to support the economic growth that has increased revenues and ensuring that billionaires and large corporations pay their fair share.”
While the budget registered a $1.3 trillion decline in federal spending over the last fiscal year, most of the decrease is from the absence of emergency spending last year on COVID-19 aid.
Mr. Biden’s proposal would raise the corporate tax rate from its current 21% to 28%. Critics say the increases would hobble the economy and contribute to the offshoring of jobs. They note that the corporate tax rate proposed by House Democrats is higher than that of many foreign competitors, including China.
“Raising the corporate tax rate is Biden’s next big mistake,” said Grover Norquist, president of anti-tax Americans for Tax Reform. “A corporate tax hike will decrease wages, increase prices, and hurt American competitiveness.”
The rhetoric is backed up by the nonpartisan Tax Foundation. Economists at the think tank published a study in April 2021 indicating that 138,000 jobs would be lost over the next decade if the corporate tax rate rises to 28%. They also noted that the country’s gross domestic product would decrease by around $160 billion.
• Haris Alic can be reached at halic@washingtontimes.com.
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