Con

Raising the corporate income tax rate would weaken the economy.

Erica York, economist, and Alex Muresianu, Federal Policy Analyst, both of the Tax Policy Institute, estimated that raising the corporate tax rate to 28% from 21% “would reduce GDP [Gross Domestic Product] by a cumulative $720 billion over the next 10 years.”[79]

They continued, “The $720 billion in lost GDP over 10 years slightly exceeds the estimated $694 billion of tax revenue that would be raised over 10 years after accounting for the smaller economy. For instance, in year 10, the economy would be about $137 billion lower, and the government would raise about $65 billion of revenue—implying about $2.10 of output lost for each dollar of dynamic revenue raised (or about $1.34 using conventional revenue) in the 10th year.” [79]

York and Muresianu explain, “Corporate income taxes are one of the most harmful ways to raise revenue. They place a higher burden on investment, reduce economic output, and reduce after-tax incomes across the income spectrum—negative economic effects that compound over time.” [79]

Bank of America CEO Brian Moynihan said lowering corporate income tax rates would provide a “certainty premium” that would allow businesses to expand: “you would see the economy grow and momentum continue to build, and unemployment continue to ease down… All that will continue to build on itself.” [13]

Business Roundtable Tax and Fiscal Policy Committee Chair Gregory J. Hayes, Chief Executive Officer of Raytheon Technologies Corporation, argued, “Prior to the pandemic, the U.S. corporate tax rate drove economic growth, creating 6 million jobs, pushing the unemployment rate to a 50-year low and increasing middle class wages. From 2018 to 2019, major U.S. companies grew their R&D by 25 percent compared to the two years prior. The current U.S. corporate tax rate has also helped put U.S. businesses on a more level playing field with global competitors and encouraged businesses to invest and grow here in the United States.” [81]

Read More