President Joe Biden has released his 2023 budget.
The president is once again proposing massive new tax increases and spending. He wants Congress to raise the corporate tax rate to 28%, increasing the U.S. rate to one of the highest levels in the industrialized world.
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Why Biden is doing this now is unclear. After all, new budget numbers reveal that U.S. companies are now paying the highest level of taxes in the country’s history, higher than they were paying before the 2017 tax cut. The new budget projects that corporate tax revenue in the current fiscal year will be a record $383 billion, an incredible 81% higher than in 2020 and nearly 30% higher than in 2017. According to the budget projections, U.S. companies will pay $4.5 trillion in federal income taxes under current law over the next 10 years, an all-time high.
Most economic and tax experts agree that a higher corporate tax rate would be harmful to the economy, resulting in lower wages, higher prices, and fewer jobs. Yet Biden wants to raise corporate taxes by $1.6 trillion over the next 10 years, a 37% increase.
This substantial tax increase, increasing the combined federal-state average corporate tax rate from 25% to 32.8%, would put U.S. companies at a competitive disadvantage with all of our global competitors. It would not hit those who avoid paying taxes, and it would encourage corporate inversions.
Put simply, it’s a bad idea.
Bruce Thompson was a U.S. Senate aide, assistant secretary of the Treasury for legislative affairs, and director of government relations for Merrill Lynch for 22 years.
