Washington D.C. — With the ink barely dry on a measure to raise the federal debt limit and avert default, the Republican majority on the House Ways and Means Committee has advanced a bill that would cut business taxes, expanding the primary cause of the nation’s increasing debt ratio.
Now, as these provisions begin to take effect, Republican members of the Ways and Means Committee are fighting hard to have their proverbial cake—the corporate rate cut—and eat it too by approving a bill that would delay three of the modest revenue increases that helped to partially pay for it. A new Center for American Program column examines the House measure.
The column notes that the bill would reduce revenues by $224 billion during the three-year period when the tax breaks would be extended, erasing a significant fraction of the savings from the spending cuts made in the recent agreement to avert default over the debt limit. The superwealthy and foreign investors would be major beneficiaries of the tax cuts, with 58 percent of the tax cut received by U.S. taxpayers going to the wealthiest 1 percent and a full third of the cost of the bill benefiting foreign investors.
Notably, the recent push for corporate tax cuts comes at a time when after-tax profits are at historically high levels as a share of the economy. Despite strong profits over the past decade, U.S. corporate taxes remain far below those of most other large economies: The United States ranked 32nd among the 38 Organization for Economic Cooperation and Development (OECD) countries with respect to corporate tax revenues as a share of gross domestic product (GDP) in 2020—the most recent year for which complete data are available.
“To date, there is little evidence that the 2017 corporate tax changes boosted investment or employment,” said Jean Ross, senior fellow and author of the article. “Congress should reverse, not expand, massive tax cuts that have failed to deliver promised economic benefits and that have put upward pressure on the federal debt.”
Read the article: “House Bill Would Slash Business Taxes and Undermine Efforts to Stem Profit Shifting” by Jean Ross
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