What do Uber, Pinterest and Slack have in common? They are all incorporated into Delaware.
We may be small, but our state dominates American business. Over 66% of the Fortune 500 reside here. And we are not only the first choice for listed companies. Over a million companies are registered in our state.
In fact, Delaware Corporation is practically a national brand because of our longstanding business-friendliness policy.
It is, therefore, a shock to see President Joe Biden’s proposal for the largest corporate tax hike since 1993. He is exactly the opposite of what he has represented in public life for 50 years.
Biden’s clever balance between economic intelligence and public compassion was why Delaware voters first elected him to the Senate in 1972 and supported him in his Senate races for the next six cycles. This equilibrium earned him the presidency in 2020.
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Biden has always stood up for workers while understanding that America’s prosperity depends on conditions that allow businesses to thrive.
But this new proposal goes against everything that Biden has represented during his long years in office. If he had spoken to his constituents in Delaware about his desire to punish job creation with crippling taxes, they would have turned their backs on him at the polls while he was still in the Senate.
It is now up to his Senate successors, Chris Coons and Tom Carper, to remind the President what American voters are looking for by rejecting his proposal that would undermine our state.
The new tax burden will be particularly severe for Delaware, which US News ranks 6th nationwide among the business-friendly states with the third largest number of top corporate headquarters.
Our economic environment has made the population considerably richer. In terms of GDP per capita, our federal state was ranked 9th in 2019.
Besides, our prosperity did not come at the expense of the poor. Only 11 states in the country have a smaller gap between rich and poor, and none of them have friendlier business environments or higher average GDPs. We rank in the top quarter of states for spending on education per student and in the bottom half for the proportion of people living in poverty.
COVID-19 has actually changed lives. But the president’s proposal comes at the worst possible time for a massive hike in corporate tax rates. The county is recovering from a pandemic and the biggest economic decline since the Great Depression.
Delaware lost 24,000 jobs – roughly 5% of state employment – from February 2020 to February 2021. We are finally beginning to see the light, and yet many in Washington have the strange idea that new corporate taxes that kill jobs will not hinder recovery.
Biden is right that our economy needs major infrastructure improvements. The American Society of Civil Engineers regularly issues testimonials about our national infrastructure, and the 2021 grade was a tight C-minus. Nationwide, there is an interruption in the water supply every two minutes. And nearly half of US roads are in fair or poor condition.
We must address these issues, but we must do so without harming our country’s workforce through higher corporate taxes.
The 2017 tax reform legislation lowered corporate tax rates from some of the highest levels in the developed world while removing loopholes that allowed some large corporations to avoid taxes altogether. The result was a gold mine in terms of economic growth.
Then COVID-19 arrived and our economy was locked down to save lives. But this 2017 tax reform is getting us back on our feet – provided our Washington lawmakers don’t take silly steps to stifle growth.
It is a great disappointment that the President is turning his back on lifelong support from both the American working class and the companies that provide them with jobs.
Now it’s up to Carper and Coons to pick up where Biden left off. You have to say yes to infrastructure improvements but no to job-destroying corporate tax increases.
Joanne Butler, a Wilmington resident, is a former economics professor and served on the Ways and Means Committee of the US House of Representatives.