If they win control of the House in November, Democrats will raise the corporate rate, according to Congressman John Yarmuth (D-KY), the top Democrat on the House Budget Committee.
As reported by Politico Morning Tax, Rep. Yarmuth floated a corporate rate as high as 27 percent, which would raise the U.S. rate above the average rate in the developed world.
Prior to passage of the Tax Cuts and Jobs Act, the U.S. had the highest corporate rate at 35 percent (plus state corporate rates averaging over 4 percent). This was nearly 15 points higher than the average rate of 25 percent across the 35-member Organisation for Economic Co-operation and Development (OECD).
The GOP tax cuts addressed this problem by reducing the rate to 21 percent. Now, the U.S. is competitive with foreign countries.
Raising the corporate rate, will harm the economy, slow job creation, and reduce wage growth. Following tax reform, the U.S. has been named the most competitive economy in the world, according to the World Economic Forum.
The economy grew at a rate of 3.5 percent in the third quarter of 2018 and is on track for the strongest growth in 13 years. Job openings are at a record high and the unemployment rate is at the lowest levels since 1969,
The competitive corporate rate is a big part of this economic success. In fact, recent studies have found that workers bear a significant portion of the corporate tax — 50 percent, 70 percent, or even higher.
A high corporate tax rate will also make America a less competitive place to do business, which will result in and investment fleeing overseas. This is not a hypothetical.
Before the corporate rate was reduced, almost 50 American businesses left the country through inversions over a decade, according to data compiled by Democrats on the House Ways and Means Committee. American companies also suffered a net loss of almost $510 billion in assets between 2004 and 2017, according to a study released by EY.
Senate Democrats have already proposed raising the corporate rate as part of a $1 trillion tax hike which also includes a $600 billion income tax increase.
Others Democrats want to go further and have proposed extensive tax hikes paired with massive new government programs such as single-payer healthcare.
When Bernie Sanders (I-VT) unveiled his single payer plan in 2016, he proposed a 6.2 percent payroll tax on businesses that would increase taxes by $10 trillion over a decade and a 2.2 percent payroll tax on families and individuals totaling $2 trillion. Sanders also proposed a $1 trillion income tax increase, an increase in the death tax, and a nearly $1 trillion capital gains tax increase.
This is likely just the tip of the iceberg because the program would cost at least $32.6 trillion over a decade according to the Mercatus Center.
Clearly, Democrats want higher taxes if elected to Congress. As Rep. Yarmuth’s comments make clear, it is a matter of when, not if, the left pushes tax hikes on American businesses and individuals.