A million jobs would be lost in the first two years if the corporate tax rate rose to 28 percent and other guidelines came into effect, according to a new study by the National Association of Manufacturers (NAM).
In a study conducted by Rice University economists, NAM calculated the effects of increasing the corporate tax rate to 28 percent, increasing the highest marginal tax rate, removing the 20 percent pass-through deduction, and eliminating certain expense accruals.
The $ 2.25 trillion infrastructure package proposed by Biden would raise the corporate tax rate to 28 percent and set a global minimum tax. The 2017 GOP Tax Act lowered the corporate tax rate from 35 percent to 21 percent.
The NAM study found that global domestic product (GDP) would decrease by $ 117 billion by 2023, by $ 190 billion in 2026, and by $ 119 billion in 2031.
“[T]His study tells us quantitatively what coast-to-coast manufacturers will say qualitatively: Increasing the corporate tax burden in America means fewer American jobs. A million jobs would be lost in the first two years to be precise, “Jay Timmons, President and CEO of NAM, said in a statement.
It was also calculated that ordinary capital, or investments in equipment and structures, would decrease by $ 80 billion in 2023, $ 83 billion in 2026, and $ 66 billion in 2031.
It pointed to the growth of the GOP Tax Act of 2017, including the fact that manufacturing created 263,000 new jobs in 2018 and that manufacturing wages rose 3 percent in 2018 and continued to rise.
NAM expressed its support for Biden’s plan last week, just not in the way Biden is willing to pay for it.
“Achieving our common goals will be the result of debate, discussion and collaboration with the administration and both parties in Congress,” Timmons said at the time.
Another recent analysis by the Penn Wharton Budget Model found that corporate tax proposals in Biden’s infrastructure plan would increase revenue by $ 2.1 trillion over a 10-year period. It also said its revenue estimate of the tax proposals is at the low end of what the plan could tell, as some of the proposals were not detailed enough to be modeled by the researchers.
The White House has said this is the beginning of the process and negotiations are only just beginning. Biden states that he is open to other ideas in order to pay for the plan.
“We have to move now. Because I am convinced that if we act now, 50 years from now, people will look back and say that this was the moment America won the future,” said the president when he accepted the proposal Pittsburgh introduced.