A sad example of economic knowledge being pushed aside for political reasons is provided by Treasury Secretary Janet Yellen. Despite being an economist (and married to a Nobel Prize-winning economist), Yellen dutifully serves her boss, President Biden, by demanding higher corporate taxes rather than exposing such taxes as nonsensical and economically harmful. Incredibly, Yellen, who wrote in the Wall Street Journal, perversely characterized the trend for countries to strengthen their economies by lowering corporate taxes as a “race to the bottom” rather than a race to be more prosperous.
As a former chairman of the Federal Reserve, charged with promoting employment, it is worrying to see Yellen now advocating policies that (ceteris paribus) put pressure on jobs and wages. This reminds me of Salmon P. Chase, who as Lincoln’s Treasury Secretary oversaw the introduction of new unsecured paper money (the “greenbacks”) to fund the North in the Civil War, and later as the Chief Justice of the US Supreme Court ruled greenbacks as unconstitutional.
The bottom line is that regardless of the anti-economic distortions Janet Yellen imposes on the rest of us, it will be impossible for President Biden and Congress to raise tax revenue enough to pay a modest portion of its proposals for astronomical expenses Of all the options they are pursuing, an increase in the corporate tax rate would be the worst.
Dr. Mark W. Hendrickson is a retired faculty member, economist, and Economic and Social Policy Fellow at the Institute for Faith and Freedom at Grove City College.
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