Vice President Kamala Harris has backed a policy proposal that would raise corporate taxes from 21 percent to 28 percent. This would be the first increase in corporate tax rates since legislation in 1993 signed into law by President Bill Clinton.
Campaign spokesman James Singer said in a statement, “As President, Kamala Harris will focus on creating an opportunity economy for the middle class that advances their economic security, stability, and dignity.”
The Committee for a Responsible Federal Budget (CRFB) has projected that the policy “would reduce the deficit by $1 trillion over a decade.” Days ago, the CRFB analyzed other policy proposals released by the Harris campaign in their “Agenda to Lower Costs for American Families,” finding that the policies would amount to a $1.7 trillion increase in the budget deficit over a decade. Together, the policies would amount to a net $700 billion increase in federal deficit spending, according to the CRFB.
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Since 1993, the corporate tax rate remained at 35 percent until the 2017 Tax Cuts and Jobs Act, signed into law by President Donald Trump, cut it to 21 percent. The 2022 Inflation Reduction Act, signed into law by Joe Biden, implemented a 15 percent minimum corporate tax but did not change the rate.
Proponents of raising corporate tax rates cite arguments of corporations needing to “pay their fair share.” Policy proposals to raise corporate taxes from progressives often include accompanying proposals to use revenue raised for public benefit or welfare programs. Politicians like Bernie Sanders look to curb “corporate greed” and divert resources to government programs.
In 2017, Donald Trump highlighted a statement from 137 economists that said lowering the corporate tax rate “will ignite our economy with levels of growth not seen in generations.”
Economists on the TAX CUTS and JOBS ACT:
“The enactment of a comprehensive overhaul – complete with a lower corporate tax rate – will IGNITE our ECONOMY with levels of GROWTH not SEEN IN GENERATIONS…” pic.twitter.com/2vCBDtLh3C
— Donald J. Trump (@realDonaldTrump) December 1, 2017
Those who advocate lowering the corporate tax rate often cite international competitiveness as a key measure that will influence where large international companies choose to operate. The average corporate tax rate among countries in the G20 other than the US is 25.93 percent, while the proposed increase by the US would move rates above those in Canada, China, and the United Kingdom. This may influence corporations to invest more assets in those countries than in the US.
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