President Biden has heralded his $4.5+ trillion spending proposals and accompanying tax hikes as an investment in “leading the world versus letting it pass us by.” Yet, paradoxically, a new analysis exposes one huge way Biden’s plans would make the US less competitive on the global stage.
Key to financing the spending plans is a proposed increase in the corporate tax rate from 21 percent to 26.5 percent. When factoring in state corporate taxes, the US’s average corporate tax rate would reach a whopping 30.9 percent. And according to a new Tax Foundation analysis, this punitive level of business taxation would be the third-highest corporate tax rate among developed countries, outstripped only by Colombia and Portugal.
Why is this a problem?
Well, the US would become a less attractive place for business investment, which is bad news for entrepreneurs, workers, and customers alike. Businesses would understandably be less likely to conduct business in the US when they could go to dozens of other developed countries with lower tax rates. As a result, our economic competitiveness would suffer.
“Returning to near the top of the OECD in corporate tax rates would… disincentivize investment and encourage firms to shift profits and locate elsewhere, resulting in fewer job opportunities for Americans and less tax revenue for the U.S. government,” the analysis explains.
Biden claims his tax-and-spend agenda is meant to reassert America’s dominance. But the costly tax hikes the president seeks would set our economic competitiveness back on the global stage. That’s not “Building Back Better”—it’s shooting ourselves in the foot.
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