A business group study is finding one million jobs could be lost if President Joe Biden’s proposed corporate tax hike, among other policy changes, goes into effect.
The National Association of Manufacturers’s (NAM) study, conducted by Rice University economists, found that if policies including the increase to 28 percent corporate tax rate, as well as other changes, went into effect then it “would result in less economic activity and 1 million jobs lost in the first two years.”
The study’s calculation includes changes like “20% deduction for certain pass-through business income” being repealed “immediately,” the increased corporate tax rate, the “corporate alternative minimum tax” being “reinstated,” eliminating “expensing (100% bonus depreciation) of most investments in depreciable assets,” among other changes.
Biden’s proposed infrastructure plan titled the “American Jobs Plan” costs $2.25 trillion and it includes increasing the corporate tax rate from 21% to 28%. His plan also proposes establishing a minimum global tax.
The study found that if the changes examined occurred then total hours “would fall by 0.7% initially before moderating,” resulting in “an employment decline of approximately 1 million full-time jobs in 2023.” The study adds, “those jobs would still be gone in 2026 before stabilizing.”
Additionally, it found, “The average annual reduction in employment would be equivalent to a loss of 600,000 jobs each year over 10 years.”
The NAM study also says:
- “By 2023, GDP would be down by $117 billion, by $190 billion in 2026 and by $119 billion in 2031.
- Ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023 and $83 billion and $66 billion less in 2026 and 2031, respectively.
- Investments in intangibles, or ‘firm-specific capital,’ are highly mobile and more sensitive to marginal tax rate
changes. Such investments would fall 2.7% by year two and would be down a total of 3.8% by year five.
- Real wages would fall by 0.6% in the long run, and total labor compensation, including wages and benefits, would
decline by 0.6% initially before falling by 0.3% after 10 years. In the long run, total compensation would also decline by 0.6%.”
NAM President and CEO Jay Timmons said, “[T]his study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: increasing the tax burden on companies in America means fewer American jobs. One million jobs would be lost in the first two years, to be exact,” according to The Hill.
While the business group supports Biden’s proposed infrastructure plan, NAM recently shared it does not support the way it is paid for.
Biden was asked if he would be willing to lower the proposed 28% corporate tax hike, to which he said on Wednesday, “I’m willing to listen to that.”
He said, “We’ve got to pay for this,” before adding that there are “many other ways we can do it.”
If Biden’s plan is enacted it would raise trillions of dollars in revenue over a 15-year span, according to The New York Times. If the corporate tax rate is changed to 28% then it would still be lower than the 35% corporate tax rate before former President Donald Trump changed it to 21%.