Corporate Tax Rate Sparks Impending Political Clash
The debate over the corporate tax rate continues, with Democrats advocating for a rate of 28% and some Republicans pushing for a rate as low as 15%.
The Wall Street Journal reports that the battle is likely to persist until the November election and will depend on one party gaining control of the House, Senate, and White House.
If President Joe Biden’s proposed 28% rate is approved, it would reverse fifty percent of the Republicans’ 2017 rate cut and make the U.S. corporate tax rate one of the highest among major global economies. On the other hand, a 15% tax rate pushed by some Republicans would be the lowest since 1935, according to the Journal.
While the GOP has not settled on a specific plan, former President Donald Trump has expressed support for a 20% corporate tax rate.
Biden’s budget proposal for the 2025 fiscal year includes raising the corporate tax rate on billion-dollar companies from 15% to 21% and the overall rate to 28%, as reported by CNBC. He also proposes a minimum 25% tax on the unrealized income of the wealthiest households.
Trump’s campaign has warned that raising the corporate tax rate to 28% could result in a significant loss of American jobs. Each percentage point represents a $130 billion gap over a decade between the two parties, creating over a $1 trillion separation.
Despite differing opinions, some executives argue for maintaining the 21% rate for U.S. companies to remain competitive and attract investments.
While Democrats have attempted to raise the corporate tax rates, it has not passed due to objections like that of Sen. Kyrsten Sinema. White House national economic adviser Lael Brainard believes that more revenue needs to be generated from the corporate side.
Republicans and executives view the 21% corporate tax rate and international tax rule changes as successful, preventing companies from inverting for tax savings since 2017.
Democrat senators will convene to discuss the 2025 tax debate, with Sen. Mark Warner still undecided on Biden’s proposed 28% rate.
Jeffrey Rodack, a senior editor with nearly half a century of experience, covers politics for Newsmax and has provided news coverage for seven years. For any inquiries, you can reach him at ✉.
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