This month, U.S. senators began upping the Democrats’ $ 3.5 trillion budget resolution package. This moment of meeting between rubber and the road seems to have given some thought to some members of their party whose votes will be needed to pass a bill in Congress and on the president’s office. Among them is Senator Jon Tester of Montana.
The president and left-wing progressive members of Congress have offered to fund the administration spending bill largely by increasing the corporate tax rate in the United States. It is a moral imperative, they say, to get big business to “pay their fair share.” In April, a particularly fiery president, Joe Biden, reiterated his call to raise the federal rate by a third, saying, âI’m sick of ordinary people getting robbed. Yet ordinary people are exactly the ones who will pay for this tax increase.
A fundamental problem with the president’s argument is that corporate taxes are ultimately passed on to workers and their families, who are the heart of our economy. Tax Foundation study finds that at least 70% of corporate taxes fall on workers through lower wages, fewer jobs and career advancement opportunities, less investment in productivity drivers like ‘equipment and technology, and increase incentives to shift profits and move corporate headquarters out of the United States.
In other words, the president’s desire to increase taxes on businesses is in fact tantamount to increasing taxes on workers as well as on consumers of their goods. And, as the Tax Foundation’s analysis notes, low-income people experience more severe impacts than others higher up the scale. Of course, when families earn less, they spend less, which creates a top-down ripple effect in our economy.
Less than four years ago, Congress voted to cut the federal corporate tax rate, then the highest among member countries of the Organization for Economic Co-operation and Development (OECD). The lower tax rate has opened the doors to significant investment and growth here in Montana and across the country.
Between 2018 and 2020, some $ 1.6 trillion in investment in jobs, manufacturing and workers poured into the United States. Capital investments have exceeded the averages of the previous two decades. No large company has moved abroad since the corporate rate was lowered. The lower tax rate was no giveaway for American businesses. It was a realignment aimed at putting American companies on a level playing field with their competitors around the world, creating more jobs and opportunities for Americans.
President Biden’s tax and spending agenda puts all of this at risk. Now more than ever, we need some Democrats in Congress to stand up for American businesses, workers and our economy. The eyes of the nation will be on Tester and others. I encourage our Democratic senator to fight the factions within his party and vote to keep the corporate tax rate competitive and reasonable for the benefit of our country and Montana.
Greg Hertz is a Republican Senator from Polson.