The tax reform proposal that has been incorporated into the Made in America tax plan, which will seek to fund the US job plan (infrastructure plan) with more than $ 2.2 billion over the next eight years, and proposed by the Joe Biden administration, is based on the tax institution’s said false assumptions. About how corporate taxation works and how it will affect workers.
“Increasing the corporate federal tax rate to 28% would raise the combined (federal state) tax rate of the United States to 32.34%, which is higher than that of all OECD and G-7 countries and all of our trading partners and competitors. Key players, including China, “reads the Tax Foundation blog.
The organization expects that raising the corporate tax rate by 7 percentage points would reduce the rate of return on commercial investment in the United States, and thus lead to less investment, less productivity, fewer jobs and lower wages.
“We estimate that raising the corporate tax rate to 28% will reduce long-term economic output by 0.8%, 159,000 jobs will be eliminated and wages will be reduced by 0.7%,” he said.
Treasury Secretary Janet Yellen revealed last week that the US government will seek to increase the corporate income tax rate (ISR) from 21 to 28%, as well as impose a 15% minimum tax rate on corporations. Accounting income for large companies that report high profits.
“ When the United States had the last corporate tax rate in the Organization for Economic Cooperation and Development, before the 2017 tax reform (implemented by the Donald Trump administration), it experienced several years of economic distress, including chronic low levels of investment, productivity, and salaries as well as significant distortions. And evasion schemes in the business sector. “
The Tax Foundation indicated that a high income tax rate would encourage US companies to invest in countries with lower taxes; Therefore, the corporate tax rate was reduced in 2017, to compete with other countries in the world.
In the Mexican case, the income tax rate for legal entities is 30%, while individuals pay a variable rate ranging from 1.92 to 35%, according to the aforementioned tax law.
The United States grouped less than the advanced economies
For its part, the Made in America tax plan shows that compared to GDP, the US collects less income through corporate ISR than nearly all advanced economies, so the increase in the rate will rise slightly in that country’s corporate income relative to GDP.
The Biden Harris administration understands that revenue must be raised to fund fiscal priorities and this should help reduce economic inequality prevailing in the United States.
“The corporate tax is one of the most progressive taxes in our tax system,” says the Made in America tax plan.
Additionally, the Financial Plan Report acknowledges that this will be a major lever for leveraging total capital taxation and will be an important support for ensuring that a capital tax is levied at least once.