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No, I don't want higher corporate tax rates!

Hey, Joe f-cked up the border. He can follow that up with a corporate tax rate hike that will really f-ck up the economy. He has the magic touch!

Corporate Tax Rate Spurs Political Fight With More Than $1 Trillion at Stake

Biden wants to raise current 21% rate to 28% while Republicans consider further cuts

By Richard Rubin, WSJ

Updated June 17, 2024 3:04 pm ET

WASHINGTON—The 21% U.S. corporate tax rate is the biggest single variable in the sprawling 2025 tax debate, and the two parties are trying to turn that dial in opposite directions with major consequences for companies’ profits and federal revenue.

The rate could climb as high as 28% if Democrats sweep November’s elections and move as low as 15% if Republicans gain full power.

President Biden’s plan for a 28% rate would reverse half of Republicans’ 2017 rate cut, pushing the U.S. corporate rate back near the highest among major economies. A 15% rate—some Republicans are heading that way, but the party hasn’t settled on a plan—would match the lowest level since 1935, boosting profits and rewarding shareholders. Presumptive Republican presidential nominee Donald Trump told corporate executives last week that he wanted a 20% rate.

Each percentage point is worth more than $130 billion over a decade in tax revenue, creating a $1 trillion-plus gap between the poles of the parties’ positions and giving the largest U.S. companies an outsize interest in the election’s outcome.

“Why would we want to put U.S. companies in an uncompetitive situation? And if we did that, why would we expect that we would attract investment to the U.S.?” said Jon Moeller, chief executive at consumer-goods maker Procter & Gamble. Moeller leads tax-policy advocacy for the Business Roundtable, the collection of large-company executives who met with Trump last week.

The group is planning an eight-figure spending campaign to support maintaining the 21% rate and extending international tax-law changes that lapse after next year.

The fight over the corporate rate makes up part of the wider tax-policy questions that lawmakers will wrestle with next year as large pieces of the 2017 tax law are scheduled to expire. Also on the table: tax rates for individuals, the child tax credit, the state and local tax deduction, tax rates for closely held businesses and the estate-tax exemption.

Corporations won tax cuts during Trump’s first term, and they would benefit if he wins again. In 2017, many companies pushed for lowering the corporate tax rate to 25% from 35%, aiming for the middle of the pack among peer countries. Trump and congressional Republicans got the rate down to 21%.

Unlike other pieces of that same law, the corporate rate cut doesn’t expire. Republicans were trying to give companies a long-term signal that they could put profits and investment in the U.S. instead of in other countries and get similar after-tax returns.

But tax policy is only as permanent as the political majority that creates it. Democrats tried to raise corporate tax rates after taking power. That plan fell short after Sen. Kyrsten Sinema (I., Ariz.) objected, and the 21% rate remained, though Democrats created a separate 15% corporate minimum tax.

Easy political choice for Democrats

Within the Democratic Party, raising the corporate tax is among the easiest political choices, because it generates so much money for other priorities. It lets Democrats direct attention to companies that enjoyed lower taxes and then raised prices; they have pointed to studies showing that the 2017 law yielded modest boosts in investment and delivered wage gains mostly to higher-income workers.

Democrats also point to U.S. corporate tax revenue as a share of the economy as being low internationally; that is misleading because, unlike elsewhere, the U.S. taxes a significant share of U.S. business income on owners’ individual returns, not through the corporate tax.

“The corporate tax share is already low and corporate profits are at record highs,” said Lael Brainard, the White House national economic adviser. “Any way you look at it, we are not raising enough from the corporate side.”

The corporate tax is projected to generate about 8% of U.S. revenue over the next decade, far less than individual income or payroll taxes, according to the Congressional Budget Office.

The corporate tax is one of the most progressive ways of raising revenue, with much of the burden falling on higher-income households, but the reality of who pays it is more nuanced than just saying “companies” or “rich people.” Economists and government agencies generally agree that shareholders ultimately bear much of the cost, with workers and consumers paying some, too. Shareholders, generally, are wealthier than the population as a whole.

The corporate tax is one of the few ways the U.S. can, indirectly, tax foreign investors in U.S. securities and nonprofits with large tax-free endowments.

But the shareholder base also includes pension funds, 401(k) accounts and some middle-income households. Biden and Democrats play down effects on those groups. They also don’t count corporate tax increases as violating the president’s pledge to protect households making under $400,000 from tax hikes.

Republicans see 21% rate as successful

Republicans and executives see the 21% corporate tax rate and accompanying changes to international tax rules as successful. They note that no U.S. companies have inverted—taken a foreign address for tax savings—since 2017 and they warn that a higher rate would harm the economy. That is a change from the prior few years, when companies such as Johnson Controls and Medtronic inverted.

Higher rates now would be more onerous than a decade ago, Moeller said. That is because the 2017 law broadened the tax base, removing tax breaks such as one for domestic manufacturing, so a 28% tax now would be 28% on more income.

Lawmakers are just beginning to weigh trade-offs within the corporate tax system and the tax code more broadly.

Democrats aren’t necessarily united behind Biden’s 28% rate. Rep. Richard Neal (D., Mass.), likely the chairman of the House Ways and Means Committee if Democrats win a House majority, said he still likes the bill his panel approved in 2021. That had a 26.5% rate, along with international-tax changes that companies sought and higher minimum taxes they opposed. Rates aren’t all that matter to companies, Neal said.

“The rate is the advertised number,” he said. “The deductions and exclusions frequently become more important to them.”

Rep. Richard Neal chaired the Ways and Means Committee when it passed a bill setting the corporate tax rate at 26.5%.

Senate Finance Committee Democrats will meet soon to discuss the 2025 tax debate, and Sen. Mark Warner (D., Va.) said he is still in wait-and-see mode on Biden’s call for a 28% rate.

However, he said: “It’s interesting when I hear from some corporate CEOs who argue for a competitive tax rate but then also complain about our $34 trillion debt.”

Sen. Elizabeth Warren (D., Mass.), who sits with Warner on the tax-writing Finance panel, said Democrats should insist on higher corporate taxes as one of their red lines in the 2025 debate, even to the point of being willing to let the expiring tax cuts lapse.

“Democrats don’t need to be suckers this time,” she said Monday. “We can turn away from our history of bad dealmaking.”

Republicans don’t have a fixed plan, either.

About a third of the electorate is made up of “persuadable voters,” who could be up for grabs for either Donald Trump or President Biden in November. WSJ breaks down what we know about this group. Illustration: Jordan Kranse

“I’m not going to get pinned in a numbers game,” said Rep. Jason Smith (R., Mo.), chairman of the Ways and Means Committee. Smith has said some Republicans might want to raise the rate.

“I would go lower,” said Rep. Ralph Norman (R., S.C.). “Taxes—I don’t care what the liberals say—taxes let people spend their own money, incentivizes our economy.”

Even those who might want to lower the 21% rate recognize that it doesn’t expire. And to the extent Republicans feel constrained by budget deficits, they might want to devote more attention to the tax pieces that do expire and carry a $4 trillion price tag for full extension.

“I don’t support raising taxes. I’m not a fan of raising rates,” said Rep. Ben Cline (R., Va.). “I wouldn’t support raising rates, but I would be premature to say that the corporate rate and what it is shouldn’t be part of the conversation.”

Write to Richard Rubin at

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