Recheck the checking account... Last week, President Biden's $1.9T stimulus bill passed, and $1.4K checks started rolling out. Now, Biden is turning his attention from distributing trillions to raising taxes... on corporations and the wealthy. This would be the first major tax hike in nearly 30 years. Some of the proposals reportedly being considered:
Hut, hut, hike... Some of the proposed hikes could hurt US GDP and wages long-term, according to the Tax Foundation (an independent think tank). Theoretically, the more $$$ companies spend on taxes, the less they have for growth and investments. But thanks to tax breaks and loopholes, America’s largest corporations paid an average tax rate of just ~11% on 2018 profits. Tax hike proposals are likely to get serious pushback. So why is Biden doing it?
Staying competitive is key... For decades, countries have been competing with each other to attract corporate investment for economic growth. The main way to do that: lower taxes for companies. In 2000, more than 55 countries had corporate tax rates above 30% — now, less than 20 do. The global average was 24% in 2018. By raising the rate to 28%, the US could lose corporate activity to other countries. That's why Treasury Secretary Janet Yellen is trying to forge an agreement with other countries for a global minimum corporate tax.