Now GOP lawmakers and some of Trump’s economic advisers are considering more corporate tax breaks — which could expand the national debt by roughly $1 trillion over the next decade, according to researchers at Stanford University and MIT — arguing that they would improve the U.S.’s global competitiveness.
Trump, who was convicted May 30 on 34 felony counts of falsifying business records before the 2016 election, has told potential donors recently that they’ll get a better tax bill with him in charge; without his help, he says, they could face “the biggest tax increase in history.”
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“The corporate tax rate has a much bigger impact on individuals than it does on businesses,” Sen. Mike Crapo (R-Idaho), who is in line to chair the tax-writing Senate Finance Committee if Republicans win control of the upper chamber, told The Washington Post. “Let me put it this way: Corporate taxes are paid by workers, by retirees and by consumers, so it has a huge impact on everybody in the United States.”
President Biden and congressional Democrats have signaled they’ll draw a sharp contrast with the GOP on taxes in campaigns this year.
Biden promises to raise taxes on the wealthiest individuals and corporations, allowing the Trump tax law’s individual rate cuts to expire and pushing for legislation with taxes on businesses to pay for new investments in child and elder care, affordable housing and education. Extending all of the Trump tax law would add $4.6 trillion to the national debt over the next decade, according the Congressional Budget Office, Congress’s nonpartisan bookkeeper.
“Our tax system right now has many, many flaws, and one of them is that we don’t raise enough money from corporations,” a senior administration official told The Post, speaking on the condition of anonymity because they were not authorized to comment publicly.
Biden and other global leaders have marched toward a unified corporate minimum tax rate of 15 percent to prevent businesses from shopping around the world for tax havens. A lower corporate rate, as some Republicans seek, would unwind that arrangement.
“There is a discussion about going to 15 [percent] and a discussion about just under 15 [percent], to make it clear to the globalists that we haven’t signed on to their stupid treaty or their agreement,” the anti-tax crusader Grover Norquist, a Trump ally, said.
Leading Republican tax-writers in Congress have warmed to that idea.
“We want to keep rates low to keep America competitive. When we were at 35 percent, we were losing great companies and millions of jobs to foreign nations. We don’t want to go back to those days,” Rep. Steve Scalise (R-La.), the No. 2 Republican in the House, told The Post on Wednesday. ” … We want to keep rates as low as we can, ideally lower than 21 percent.”
Biden and Democrats counter that cutting taxes for businesses would reward the groups and executives they have blamed for persistent inflation, and that increasing corporate taxes would begin to wrest back wealth that the richest Americans accumulated during the pandemic’s economic shocks.
“The fundamental economic policy choice that lies ahead is whether to return to the Republicans’ failed trickle-down approach or forge ahead with the president’s proven plan to grow the economy from the middle out and bottom up,” Lael Brainard, Biden’s national economic adviser, said in a speech at the Brookings Institution in May. “Do we want a tax system that favors the middle class or the wealthy? The expiration of Trump’s 2017 tax package next year will put tax fairness front and center. Tax fairness is central to the president’s approach to building an economy that works for all Americans — where growth is broadly shared, everyone has a fair shot, and we reduce fiscal risks and keep our commitments to seniors.”
Biden in April said he would let the Trump-era law expire, and some congressional Democrats have signaled they will try to pin ensuing tax increases on Republicans, who designed many of the cuts to be temporary.
“This election is the election where the stated difference between the two presidential candidates is furthest apart on tax policy,” Norquist said.
“If you’re going to vote on taxes, the key question you should ask yourself is, ‘Do I think rich people pay too much or too little?’” said Michael Linden, a former Biden administration budget official and senior policy fellow at the Washington Center for Equitable Growth.
But Karoline Leavitt, the Trump campaign’s national press secretary, blamed Biden for what she said would be “the largest tax hike ever” if the 2017 law expires.
“When President Trump is back in the White House, he will advocate for more tax cuts for all Americans and reinvigorate America’s energy industry to bring down inflation, lower the cost of living and pay down our debt,” she said in a statement.
Biden’s pitch to voters on taxes largely focuses on how his administration would spend the new revenue. His proposed budget for the 2025 fiscal year — a largely symbolic document, since the GOP House wouldn’t pass it — would have Congress offer universal prekindergarten education, provide 12 weeks of paid family and medical leave, expand anti-poverty tax credits, and create a new tax break for first-time home buyers. Those programs would be funded by increasing the corporate tax rate from 21 percent to 28 percent.
“The same corporations that have been price-gouging the American consumer at the grocery store, at the gas pump and everywhere else are now spending their money loading up these Republican political action committees with the plan that the Republicans will deliver even more tax cuts. It’s obscene,” Sen. Elizabeth Warren (D-Mass.) told The Post.
Trump’s tax law did spur some investment and wage growth, but fell far short of its promises to goose the U.S. economy, according to a study published in March by researchers at Princeton University, the University of Chicago, Harvard University and the Treasury Department.
Republicans frequently argued that the law’s tax cuts would pay for themselves, but in the end, only generated enough growth to offset 20 percent of the drop in federal revenue from lower rates, according to the nonpartisan Center for a Responsible Federal Budget. Economic growth from extending the law, the think tank found in a study published Thursday, would pay for between 1 and 14 percent of the future cost.
Biden’s legislative victories — including the 2022 Inflation Reduction Act and Chips and Science Act — provided tens of billions of dollars in tax incentives for microchip manufacturers and clean energy producers.
The chips bill has led to construction and job booms in Phoenix and Wisconsin as multinational producers take advantage of the new incentives. The Inflation Reduction Act included massive tax breaks for companies that build new wind and solar energy facilities or sequester carbon emissions.