Top White House economic adviser Larry Kudlow on Tuesday criticized Joe Biden’s tax plan, saying that it would prompt businesses to move operations outside the United States.
“You can’t buy America if you create an inhospitable business and investment environment with tax increases across the board,” he told Fox News @ Night, adding that “how can you buy America if you’re repelling American business? They will stay offshore.”
Kudlow is referring to Biden’s $700 billion “Buy American” plan in which the federal government purchases $400 billion in U.S.-made goods and services while investing $300 billion in new technologies over the next four years.
Biden, the presumptive Democratic presidential nominee, contends his plan would help add 5 million jobs in the manufacturing and innovation sectors of the U.S. economy.
Kudlow sees it differently because of the tax increases that Biden has proposed.
The White House adviser argues that the tax increases will put a damper on domestic job growth because companies will leave the U.S. to set up shop in countries offering lower tax rates. He also thinks that the tax increases are ill-timed, considering that the nation’s economy is reeling from the coronavirus pandemic.
“Why would you want to raise taxes if you’re coming out of a very deep pandemic contraction? I don’t understand it,” he said.
Biden has called for tax increases on businesses and individuals totaling $3.8 trillion over the next 10 years. His proposal includes increasing the corporate income tax rate to 28%, from its current 21%, a minimum tax on corporations with book profits of at least $100 million, and doubling the tax on certain profits earned by foreign subsidiaries of U.S. firms, from 10.5% to 21%.
The former vice president’s plan is projected to reduce Gross Domestic Product by 1.51%, shrink wages by 0.98%, and kill more than 500,000 over the next 10 years, according to the Tax Foundation, a nonpartisan tax think tank.
Biden’s increase on the corporate income tax rate would put the U.S. above the worldwide average corporate rate of 24.8%, according to the Tax Foundation. Such an increase could prompt companies to shift operations to lower-taxed countries and hurt the U.S. economy, according to Investopedia.
“When they’re forced to pay higher taxes at home, many U.S. companies relocate to countries with more favorable tax laws. … [And] the number of U.S. jobs at major multinational corporations tends to shrink when they move their operations to another country,” it stated in its May 27, 2020, report.
