President Biden’s newly unveiled $2 trillion infrastructure plan is already facing blowback from economic watchdogs who say the corporate tax hikes pitched to pay for years of pricey projects could end up costing jobs.
“Raising the corporate tax rate will inevitably have a negative effect on wages because a large chunk of the corporate tax rate is passed on to workers in reduction in wages and layoffs,” David Tuerck, president of the Beacon Hill Institute, told the Herald.
The Biden administration unveiled a $2 trillion “American Jobs Plan” on Wednesday that sets out to rebuild and improve the nation’s crumbling infrastructure, as well as pump billions of dollars toward climate resiliency, greener energy and broadband improvements over eight years.
Biden would pay for it all by increasing the corporate income tax rate to 28% — former President Donald Trump slashed it to 21% from 35% during his tenure — discouraging “offshoring” by imposing a 21% global minimum tax and enacting a 15% minimum tax on large corporations’ income. It would take 15 years of higher taxes to pay for the projects.
The president said he was open to other funding suggestions — so long as no one earning less than $400,000 sees their taxes go up.
“This will create millions of jobs, good-paying jobs, will grow the economy, make us more competitive around the world, promote our national security interests and put us in a position to win the global competition with China in the upcoming years,” Biden said as he unveiled his plan in Pittsburgh.
But Trump slammed Biden’s plan as a “ludicrous” proposal that would do the opposite — “send thousands of factories, millions of jobs and trillions of dollars” to nations such as China.
“The Biden plan will crush American workers and decimate U.S. manufacturing, while giving special tax privileges to outsourcers, foreign and giant multinational corporations,” Trump said in a statement through his 45 Office website, adding that it “would be among the largest self-inflicted economic wounds in history.”
Garrett Watson, senior policy analyst at the Tax Foundation think tank, estimates that raising the corporate tax rate to 28% would cut 159,000 jobs, reduce the GDP by nearly 1% and reduce wages for workers “across the income scale.”
Watson also said it would also make the U.S. “uncompetitive with the rest of the industrialized world” and encourage corporations to move investment abroad.
“Corporate tax hikes harm workers, and lawmakers need to decide if this is the best move during a time where businesses are trying to bring back more people into the workforce,” Watson said.