Organized labor is working to hurt working people.
With our economy struggling to recover the wages and jobs lost in the pandemic, labor leaders are supporting a job-killing tax increase that would smash rank-and-file workers and their families.
Most economists believe that a corporate tax rate increase is the policy change most harmful to economic growth. It results in less capital investment, lower wages, and fewer jobs. Yet, labor leaders are supporting a plan to raise the nation’s corporate tax rate to one of the highest in the industrialized world.
Studies have shown that working people bear as much as 50% to 70% of the corporate tax burden. A 2016 Federal Reserve Board study found that corporate rate increases “are uniformly harmful to workers” and that a 26.5% tax rate could cost a household earning $85,000 nearly $3,000 a year in lower wages.
Conversely, when the corporate rate was reduced to 21%, real median wages increased $4,400 in 2019, the largest one-year increase in U.S. history, and the unemployment rate fell to a 50-year low of 3.5%.
A corporate tax rate increase would also reduce jobs. A study by the National Association of Manufacturers found that higher tax rates on manufacturers would lead to major job losses for workers. The NAM study projected that the tax increases would lose 1 million jobs in the first two years and 500,000 jobs each year for the next decade.
Increasing the corporate tax rate could also result in new corporate inversions. Before the rate was reduced to 21%, the United States experienced a wave of corporate inversions, with dozens of companies and jobs relocating to lower-tax countries to avoid a noncompetitive rate.
Let’s protect worker wages and jobs. We should reject the Democrats’ corporate tax plan.
Bruce Thompson was a Senate aide, an assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
