A rebuttal of Glenn Hamer’s claims about the negative effects of raising the corporate tax rate
Much of Mr. Glenn Hamer’s talk about how President Biden’s Build Back Better program is intellectually dishonest nonsense. Raising the corporate tax rate will not hurt the manufacturing sector or cost workers their jobs.
We have had much higher corporate rates and our economy has performed very well with companies enjoying strong after-tax profits, and the nation enjoying economic growth, rising wages and a level rising life.
Throughout the 1950s and into the 1960s, corporation tax ranged from 48% to 52%. During this period our economy was functioning very well; much better than it has worked over the past 40 years because the economic rewards (income) have been distributed much more equitably across the population.
In both times there were recessions, but recessions in the 1950s and 1960s tended to be shorter, no longer than 11 months (1949 and 1969). Those since 1980 have tended to be longer, lasting 1 year and 4 months in 1981-82, and 1 year and six months during the âGreat Recessionâ of 2007.
Low corporate tax rates probably do not cause recessions, but they can hinder economic recovery and help lengthen it.
Today’s corporate tax rate is relatively low at 21%. And the proposed 28% is neither “drastic” nor “huge” to fair measure, and would NOT be “the highest corporate tax rate in the industrialized world.” Hamer is either deeply ignorant of the history of corporate income tax and the current corporate tax rates of other nations, or he is deeply intellectually dishonest.
Currently, at 21%, the United States has a lower corporate tax than 16 developed / industrialized countries. The three highest corporate tax rates among developed countries are Japan (30.62%), Australia (30%) and Germany (30%). corporate tax rate at 28%, which would be even lower than the rates of these three developed countries; but, as noted by Mr. Hamer, higher than 25% of China.
However, the problem with his “analysis” goes beyond that, as his “analysis” ignores the hundreds of thousands, most likely millions of jobs that will be created with President Biden’s $ 350 billion a year over ten-year build. Back Better legislation and the $ 120 billion a year over ten years for the infrastructure bill and tax revenue these jobs will create.
Given the American history of economic growth and a stable economy with much higher corporate tax rates, there is no reason to believe that increasing the corporate tax rate to 28 % will have a detrimental effect on the economy, including the manufacturing sector.
Indeed, the real culprit in the decline of manufacturing in the United States is the neoliberal “free trade” policies Mr. Hammer probably supports that encourage American manufacturers to close factories in the United States and move them to low-wage countries. One of the things President Biden wants to do with his Build Back Better program is bring those manufacturing jobs back to the United States by removing incentives for companies to move them overseas.
Another intellectually dishonest aspect of Mr. Hamer’s “analysis” is the implication that $ 3.5 trillion will be spent over one year. No, this is a 10-year program with, on average, $ 350 billion spent annually. In fairness to Mr Hamer, the media also regularly imply that the $ 3.5 trillion will be spent over one year.
Other important considerations include:
- The fact that no company will pay the proposed maximum rate of 28% because of the deductions it is allowed to make, such as depreciation of equipment.
- Perhaps more importantly, many extremely profitable companies today pay ZERO corporate taxes – Amazon is a glaring example. It is beyond the imperative that loopholes in the tax code be closed so that ALL corporations pay corporate taxes.
- If we think that $ 350 billion per year over 10 years is a lot of money, consider the military budget, which exceeds $ 1,000 billion per year. If Mr. Hamer is concerned about corporate tax rates, one way to keep those tax rates low would be to cut military spending. Currently, total US military spending is about half of total world military spending. Does the United States really need to spend as much on the military as the rest of the world combined?
- There are other provisions in President Biden’s proposal to help pay for his infrastructure and his Build Back Better program, and that raises taxes for the wealthy – something else Mr. Hamer is undoubtedly opposed to. . Yet, as Warren Buffett has had the integrity to point out, he and many other billionaires (most?) Pay a lower percentage of their income in taxes than the average citizen. Maybe if we taxed the rich more fairly, we wouldn’t need to raise corporate taxes that much.
The TRUE “bottom line” is that businesses are immensely profitable and that the country’s wealth is increasingly concentrated in the hands of those whose wealth derives from business. corporate income tax and wealth tax.
Of course, when someone’s goal, like Mr. Hamer’s probably is, is to make the rich richer and leave the crumbs for everyone, well, truth and factual analysis must be deleted.
Editor’s Note: The above column was written by Rio Grande Valley-based writer and scholar Samuel Freeman (pictured above). The column appears in The Rio Grande Guardian with permission from the author. Freeman can be contacted by email via [emailÂ protected].
Editor’s Note: The guest column to which Samuel Freeman was responding was written by Glenn Hamer, president and CEO of the Texas Association of Business, a subsidiary of the National Association of Manufacturers. , appeared exclusively in The Rio Grande Guardian. Click here to read the column.
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