Biden, G-7 leaders embrace 15% global minimum corporate tax rate
President Biden and leaders of the G-7 group of nations will endorse a global minimum corporate tax rate of at least 15% on Friday, a policy that could ultimately drive business investment away from the U.S.
That’s according to the Taxpayer Protection Alliance (TPA), a nonprofit advocacy group based in Washington, D.C., which argues that a higher global minimum rate would ultimately be “passed on to workers and consumers through reduced compensation and higher prices.”
“We won the race to the top, having the highest corporate tax rate in the industrialized world prior to the tax reforms of 2017,” TPA vice president of policy Patrick Hedger said. “It contributed to decades of anemic growth.”
Prior to the passage of the 2017 Tax Cuts and Jobs Act, the U.S. corporate tax rate sat at 35%; it’s now at 21%.
“When America dropped its rate to a competitive 21%, investment, jobs, and wages flourished prior to the onset of the pandemic,” Hedger said. “Biden’s global minimum corporate tax isn’t so much about ending the competition between nations, but rather ending the competition between progressives’ wishes and reality.”
There is some evidence to suggest that corporate taxes are ultimately borne by workers and consumers. A recent analysis conducted by the Tax Foundation suggested that up to 70% of the tax burden falls onto labor. As the tax reduces investment, productivity and wages, the dollar amount of the cost to labor may exceed the revenue raised by the tax by a “wide margin,” the Tax Foundation said.
But the Biden administration is arguing the minimum rate will build a more equitable tax system that will help “deliver a foreign policy for the middle class and will help support working families everywhere.” Money raised from the higher tax would go toward funding infrastructure initiatives, as well as child care, affordable housing and education, according to a White House fact sheet.