USCC Says A Higher Corporate Tax Rate Would Harm All Americans

According to a new interactive map released by the U.S. Chamber of Commerce (USCC), raising the federal corporate income tax would significantly impact local businesses, workers, and families across the country. That outcome is because when businesses face higher tax burdens, they have less capital to invest in operations, innovation, and expansion, leading to reduced job creation and diminished productivity, which, together, lower wages and raise prices.

Before the Tax Cuts and Jobs Act (TCJA) became law in 2017, the United States had the highest statutory corporate tax rate in the industrialized world, which hurt the country’s economy and pushed investment and jobs overseas. The TCJA lowered the corporate tax rate from 35 percent to 21 percent. Along with the TCJA’s other pro-growth reforms, the reduced corporate rate significantly boosted domestic investment while increasing economic growth and workers’ wages.

According to the USCC, raising the corporate tax rate from 21 percent to 28 percent would increase federal tax revenue by an estimated $910 billion over the next decade. But where would that $910 billion come from? Businesses have only three options to pay for higher taxes: raise prices, reduce costs, or lower returns to investors. Generally, they do all three, but consumers suffer the most, the USCC found. Indeed, recent economic research shows that a little more than half of the cost of higher corporate taxes is borne by consumers in the form of higher prices. Another 28 percent is shouldered by workers in the form of lower wages, and the remaining 20 percent is borne by shareholders, including retirement savings accounts, in the form of lower returns.

Wondering how a higher corporate tax rate would affect your local economy? Find out at this link.