President Biden's proposal to raise the corporate tax rate from the present 21% to 28% to help finance his infrastructure plan (it was 35% before the Trump tax cut) received a justification from a recent report from J.P. Morgan who opined that "Its Time For Corporate Taxes To Catch Back Up With The Rest Of The World." And J.P. Morgan, a very large corporation itself, should know. The reasons given by business and the GOP for the past corporate tax cuts are undercut by the Morgan report.
J.P. Morgan's economic research reports as follows: (1) The US should increase corporate tax rates to catch up to other world economies. (2) The US is more focused than other countries on raising tax revenue from personal income and housing. (3) Before the 2017 Trump tax cuts, it found US corporate tax revenues lower than the global average. (4) Relative to other economies, the US prioritizes raising tax revenue from personal income and property. In other words, the current American tax system raises more from people's paychecks and real estate investments than from companies, compared to the rest of the world. (Note from this writer: And to think the US is the most advanced country in the world) (5) Furthermore, dating back to 2000, revenues actually collected from American corporate taxes represented about 2% of the GDP versus a 3% average globally. It reflects a complex system of exemptions and deductions embedded in the US tax code that reduces the corporate tax base and results in corporate taxes contributing a much lower share of total tax revenue in the US than elsewhere. (6) And after the Trump tax cut the percentage fell to 1% of GDP, which explains the American reliance on taxing personal income and housing. (7) The US stands out as having the highest share of revenue from personal income (both labor and goods investment) across the economies in the study. (8) So called ordinary people account for a greater share of tax revenue in the US than elsewhere.
The report refutes the GOP and the business community's fairy tale that American companies need corporate tax reductions to be competitive in the world. It also confirms what the average American knew long ago, that corporations do not pay their fair share of taxes. And no one knew it all better than any one else than Politidose, the democratic party and especially former President Bill Clinton whose administration raised corporate taxes and his administration had the greatest economy in every category. The Reagan, Bush 43 and Trump administration did not even come close and all three cut taxes for corporate America. But all three did give the country an economic recession.
The sad part of it all falls to the news media who promoted the republican talking points about how tax cuts for corporations were needed when they were aware of the past failures and the lies. But PolitiDose was there over the last 9 years talking about those failures. The media also let slide just how effective President Clinton's policies and plans were without corporate tax cuts.
So now the future is in the hands of President Biden and he is well aware of the past failures of those tax cuts and that corporate America is not paying their fair share. He is asking them to do so now at a critical time for the economy. The President, with his experience also knows that understanding the mistakes of the past is the key to a better future. And we Americans do not want our future to look like the failed past.
This commentary written by Joe Lorio
