The unemployment rate dropped to 6% as well, but critics of the tax hike worry that the economic expansion and job creation may be short-lived under massive tax hikes. Biden said he will introduce the second part of his infrastructure tax plan later this month, targeting households earning $400,000 with income, capital gains and estate taxes.
House Banking Committee Chairman Sherrod Brown (D-Ohio) disagrees with critics. “Biden’s plan would be paid for by ensuring this country’s largest corporations pay their fair share in taxes and are encouraged to create jobs here at home,” Brown said in a press release.
Brown “has been pushing for major corporations to pay their fair share for years and believes they should be encouraged to invest in workers here in the U.S rather than shifting jobs and production overseas,” his office said in the release.
But sticking U.S. corporations with the highest OECD tax rate doesn’t sound competitive or conducive to job creation, Watson said.
Even states that allow corporations to deduct state corporate income tax paid against the federal taxable income, lowering the effective federal corporate income tax rate, will not be able to create a competitive corporate tax if the Biden tax increase is passed, he added.
“For example, a corporation in Michigan may deduct tax paid at a 6% flat rate against a 28% federal corporate income tax, reducing its effective top federal rate to 26.3%, but still yielding a combined rate of 32.3%—higher than any OECD nation,” according to Watson.