After November’s election, I figured we would have gridlock. Biden would propose some statist ideas, but they would be blocked by Republicans in the Senate.
All things considered, not a bad outcome.
But Democrats won the run-off elections yesterday for both Georgia Senate seats, which means they now have total control of Washington.
And that means, as I recently warned, a much bigger threat that Biden’s proposed tax increases may get enacted.
That won’t be good news for America’s economy or American competitiveness.
Today, let’s focus on the biggest tax increase that the President Elect is proposing.
In an article for National Review, Joseph Sullivan writes about the adverse impact of Biden’s increase in the corporate tax rate.
Biden’s corporate-tax proposal is remarkable. …If the U.S. adopted Biden’s proposed federal tax rate, its overall corporate-tax rate would not be “in line” with the rest of the G7.
Assuming U.S. state and local corporate taxes stayed the same, Biden’s proposal would result in nearly the highest overall corporate-tax rate in the G7, according to data from the OECD. The U.S. would be tied with France. …The average overall corporate rate among the G7 has fallen to 25 percent… With the G7 average trending in one direction, Biden would move the U.S. in the opposite direction.
In other words, while the Biden team claims that a higher corporate tax won’t be too damaging because it will be similar to the rate in other major nations, the U.S. actually will be tied with France once you include the impact of state corporate tax burdens.
Here’s the chart included with the article.
And don’t forget that there are many other economies where the corporate tax rate is well below the G7 average.
The bottom line is that the United States currently ranks only #19 out of 35 nations in the Tax Foundation’s competitiveness ranking for OECD nations.
The good news is that being #19 is much better than being #31, which is where the U.S. was in 2016.
The bad news is that Biden wants to undo much of the 2017 reform, as well as impose other tax increases. And that means a much lower competitiveness score in the future.
Which ultimately means lower wages for American workers.
P.S. Although the proposed increase in the corporate rate is theoretically the biggest revenue raiser in Biden’s tax plan, I will safely predict that it won’t raise nearly as much revenue as projected by static revenue estimates. I wasn’t able to educate Obama on this issue, and I’m even less hopeful of getting through to Biden.
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Image credit: geralt | Pixabay License.
