Biden's Corporate Tax Cut Plan

Former Vice President Joe Biden has proposed a tax plan that would focus on rolling back tax cuts for corporations. Biden’s plan would increase the corporate income tax from 21% to 28% (it was reduced from a maximum 35% to 21% by the 2017 tax reform legislation). Biden would also create a minimum tax for corporations with at least $100 million in book income and roll back many of the tax preferences made available to corporations under the 2017 tax reform law.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about Biden’s plan to raise corporate income taxes.

Below is a summary of the debate that ensued between the two professors.

Their Votes:

Bloink

Byrnes

Their Reasons:

Bloink: Big corporations got a major windfall in the 2017 tax reform package. Many also just received a taxpayer-funded government bailout in response to the Covid-19 pandemic. Many of these corporations seem to have wasted these breaks, failing to hire and expand as Republicans who supported the tax changes had promised. It’s now time to look to the future and evaluate what the country as a whole really needs.

Byrnes: Raising corporate income taxes would have one primary effect—it would motivate both the large and small corporations that support our economy to move their operations overseas. The fact is, corporations simply could not compete in the pre018 corporate tax environment. The high corporate taxes consistently motivated companies to look for ways to minimize their U.S. ties and U.S. tax liability. A proposal like this won’t raise the substantial revenue that’s being promised—it’ll instead drive that revenue overseas.

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Bloink: We have to focus on funding the types of programs that are going to get America back on its feet. That means we focus on ordinary, hardworking Americans who have been struggling for months in the face of an unprecedented economic downturn. The stock market might be strong—but where are the jobs we were promised when we bailed out big businesses with loan forgiveness earlier this year?

Byrnes: Do we want to see valuable jobs lost to our foreign competitors? Do we want to see companies flee to tax-friendly jurisdictions? Businesses are only beginning to rebound from a downturn that no one could have foreseen. We need those businesses to stay here to generate jobs and help our economy regain strength—which isn’t something that can happen overnight, especially given the current realities.

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Bloink: We need to focus less on what big businesses need and more on what Americans need. We can use the added revenue from an increased corporate income tax to fund infrastructure projects, work on student loan forgiveness and make sure every American has access to quality, affordable healthcare. When we focus on those priorities, we will generate jobs, we will generate economic growth and we’ll help hardworking people get back on their feet.

Byrnes: Raising corporate income taxes punishes the businesses we should be supporting. How are companies supposed to grow when they’re over-taxed as it is? Businesses are struggling just like American individuals are right now—we need to focus our attention on encouraging job growth and economic rebuilding. That’s what will work to get the country back on track.