The results of a recently carried out analysis had shown that the Democrats’ currently pending tax increase would force the American corporate tax rate to the third-highest when compared to other advanced economies.
In an attempt to try and fund a $3.5 trillion social welfare bill, Democrats that are part of the House Ways and Means Committee are trying to force through a $2.9 trillion tax increase. Under this new bill from the Democrats, a corporation’s first $400,000 of income would be set to a tax rate of 18%. Next, an income of up to $5 million would then be taxed at a set rate of 21%, and any earning past that would start to see a 26.5% tax rate.
In comparison, the Tax Cuts and Jobs Act of 2017, which was the primary legislative accomplishment from form President Donald Trump, sought to lower the tax rate for corporations from 35% to 21%.
The analysis from Penn Wharton Budget Model, which is a nonpartisan group of University of Pennsylvania economists that seek to analyze public policy proposals, discovered that the plan from the Democrats would increase corporate taxes to the third-highest among Organization for Economic Cooperation and Development nations, effectively reversing the changes made by President Trumps legislation:
The OECD average rate has declined almost uniformly from 32.3 percent in 2000 to 23.2 percent in 2021. The rate in the U.S., on the other hand, stayed stable at 39 percent between 2000 and 2017, and then dropped to 25.8 percent after the Tax Cuts and Jobs Act of 2017 took effect.
Between 2003 and 2017, the U.S. was among the top three OECD countries with the highest rates. In 2021, it ranks 13th under current law. The proposed changes by The House Ways and Means Committee would increase the federal statutory rate to 26.5 percent, bringing the combined federal and state rate to 30.9 percent, and make the U.S. rate the third highest among OECD members. Only Portugal and Colombia would be higher at a rate of 31.5 percent and 31 percent respectively.
In a statement recently made by Rep. Kevin Brady (R-TX), who is the Ranking Member of the House Ways and Means Committee, to The Daily Wire, the higher corporate tax rate would end up shoving American businesses and jobs overseas.
“Raising these corporate business rates so high, and then making other international tax changes that favor foreign companies over America — without question, we are going to take a big step backward to those days where Americans regularly went online or opened the paper and saw another company pulling up roots and moving their plants overseas,” he stated. “I’m really worried about how economically crippling those high tax rates will be.”
As groups of lawmakers continued to talk about the tax bill, yet another recent analysis has discovered that Americans’ tax expenditures over the past year were larger than their spending on health care, food, entertainment, and clothing combined.