(The Center Square) – A new analysis of President Joe Biden’s tax plan raises concerns about its impact on the economy both now and in the future.
The American Enterprise Institute published a report On Wednesday, he analyzed the corporate tax increases proposed by Biden, saying it would reduce the incentive to invest in the United States in the years to come.
“Corporate tax policies vary considerably between developed countries,” said Kyle Pomerleau, tax specialist at AEI. “In addition to the differences in corporate tax rates, there are important differences in corporate tax bases. Some countries provide tax concessions for certain types of assets and income and impose low charges on income and business investment. Other countries offer smaller specific advantages for certain types of income and activities and impose higher tax burdens on business investments. “
The report argues that including a corporate tax hike in the Democrats’ $ 3.5 trillion reconciliation bill would make the United States less competitive on the world stage and could hurt growth economic.
“Current proposals for corporate tax reform in the United States would raise statutory and effective tax rates well above OECD averages,” the report said. “The Biden proposal, which would raise the federal corporate tax rate to 28%, would increase the combined statutory corporate tax rate to 32.3%, which would be the second highest in the OECD. The METR and AETR on new investment would also become the second highest in the OECD. “
The House Democrats’ similar proposal would also put the United States at the top of the list of corporate tax rates among the OECD, the Organization for Economic Co-operation and Development, which includes 38 member countries, the report says. .
“The House proposal, which was approved by the House Ways and Means Committee on September 15, 2021, would increase the corporate tax rate to 26.5%. According to this proposal, the combined statutory corporate tax rate in the United States would be 30.9%, the third highest in the OECD, ”the report said. “The METR on business investment would rise to 22.4%, which would be the third highest in the OECD, and the AETR would rise to 28%, which would be the second highest in the OECD”
These high tax rates can create hesitation among commercial investors when looking to invest their funds.
“Proposals that raise the statutory corporate tax rate and increase the tax burden on business investment will increase the incentive to shift profits and high-yielding assets to low-tax jurisdictions and reduce the incentive to invest. in the United States, “said Pomerleau.