According to Grover Norquist, President of Americans for Tax Reform, the proposed tax hikes in the Democrat’s reconciliation bill would push American business taxes higher than the taxes imposed on businesses by the CCP.
In a September interview with Just the News, Norquist discussed the details of the proposed tax hikes and how they would affect both American business and the average American.
Norquist, describing the $3.5 trillion reconciliation bill proposed by the Democrats, noted that the spending package is likely far larger than the American people want, even if it’s not as large as the Democratic leadership would prefer:
“Maybe not as big as what Biden wants…[but] there’ll be a massive spending increase; maybe not as big as what Bernie Sanders wants, but more than the American people asked for or wanted.”
Then, describing how the Democrats plan to pay for the massive bill, Norquist went on to note the relative size of the tax hikes planned by Democrats in the House Ways and Means Committee.
“They’re going to take the corporate rate — the tax that American companies pay — up higher than communist China’s business tax, higher than the European average. Okay, so we will not be competitive with China when people are looking to invest, not competitive with Europe when people are looking to invest, start new firms.”
According to the “Responsibly Funding Our Priorities” Section of the spending package approved by the Democrat-controlled House Ways and Means Committee, the new, graduated corporate tax rate would be as follows:
“18 percent on the first $400,000 of income; 21 percent on income up to $5 million, and a rate of 26.5% on income thereafter.”
In addition, the Ways and Means Committee tax change bill would modify allowable Foreign Tax Credits and reduce allowable deductions, among other changes.
The tax rate increases in the bill are meant to offset the cost of the $3.5 trillion spending increase planned by the Biden Administration and at the center of the Senate’s fight over government spending. The corporate tax rate hikes would raise about $540 billion in revenue.
Senator Manchin (D-WV) has proposed a similar corporate tax rate increase. According to Politico, “Manchin wants to raise the corporate rate to 25 percent, which would generate around $400 billion (Ways and Means wants a 26.5 percent rate, which would produce about $540 billion).”
Both Manchin’s bill and the House Ways and Means Committee-approved bill would raise the top individual tax rate to 39.6%, returning it to its pre-Tax Cuts and Jobs Act level.
Norquist’s claim appears to be accurate, as it referred to the Ways and Means tax rate hike. The current corporate tax rate in mainland China is 25% and has remained at that level for over a decade. Similarly, in the EU, the average corporate tax rate is 21.7%. Manchin’s proposal would put US corporate taxes on par with the business taxes levied by the CCP and the Ways and Means proposal would push taxes on companies making more than $5 million even higher than what the communists collect. Had the White House had its way, the corporate tax rate would have been raised to 28%, 3% higher than in communist China.
Futhermore, when combined with state taxes, the levies on American businesses would be far higher than those taxes imposed on businesses by the CCP or EU nations. ATR estimates that in the example state of Wisconsin, home to eight Fortune 500 companies, the post-tax hike average tax rate would be 32.3%. That’s a full 7.3% higher than in communist China.
Norquist went on to discuss how the proposed corporate tax increases might impact the average American:
“They want to raise taxes that will make the stocks inside your life savings, your 401k, your IRA, they want to make them worth less, because if you tax an income stream from something, it’s worth less. If you have a 401k, or an IRA, or a health savings account, you will be harmed directly by this. If you pay utility bills, you will be paying higher taxes. Why? Because your utility for energy or natural gas pays federal income taxes, corporate taxes, and those taxes imposed by the federal government on utilities are paid, 100%, they’re passed on to consumers.”
However, according to Politico, the ultimate tax rate increase will likely be smaller, as the reconciliation bill has shrunk from the original, $3.5 trillion proposal to either $2 trillion or the $1.5 trillion figure that Senator Manchin has said is the maximum he will vote for.