Labor unions and labor-backed groups are urging the lame-duck Congress to pass a bill that would devastate the working men and women they claim to represent. They want to raise the U.S. corporate tax rate to one of the highest levels in the world.
With economic experts forecasting a major economic slowdown next year, raising the corporate tax rate would have a disastrous effect on our economy, making the coming downturn deeper and longer lasting. Study after study has shown that a higher corporate tax rate would be harmful to economic growth, leading to lower wages, higher prices, and the loss of millions of jobs.
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A Federal Reserve Board study found that a corporate tax rate increase would be “uniformly harmful to workers,” reducing wages by thousands of dollars a year. The tax increase would also hit millions of small businesses struggling to survive. It would put American companies at a competitive disadvantage with their foreign competitors and drive them to relocate operations and jobs overseas.
Contrary to the groups’ claims, government budget data clearly show that U.S. companies are paying their fair share of the tax burden. The Congressional Budget Office has released a report showing that U.S. companies are paying more in federal taxes than in any other year. Corporate taxes totaled $425 billion in fiscal 2022, the highest amount ever paid in U.S. history. Corporate taxes as a share of the economy are at 1.7% of GDP, higher than the 40-year average of 1.6%.
Raising corporate taxes now with the economy slowing is a terrible idea that would hit working people and their families. It should be rejected out of hand.
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Bruce Thompson was a U.S. Senate aide, assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
