US Chamber Asks Congress to Avoid Pushing Up Corporate Taxes From 21 Percent

The U.S. Chamber of Commerce asked Congress not to raise corporate taxes next year and to support “pro-growth tax policies” that ensure robust economic gains.
In addition, the organization suggested implementing policies such as allowing firms to deduct research and development expenses and enabling companies to immediately deduct the full cost of certain capital investments.
Raising corporate taxes is the “fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share,” Harris’s campaign spokesperson, James Singer, said on Aug. 19.
“As president, Kamala Harris will focus on creating an opportunity economy for the middle class that advances their economic security, stability, and dignity,” he said.
The chamber warned that raising taxes on businesses would negatively affect the U.S. economy in three ways.
First, such hikes reduce the return on investment for business owners, potentially making them wary of spending funds on ventures. Second, higher taxes end up affecting not just the business and its investors but also workers and employees.
The organization cited a study to point out that 52 percent of higher corporate taxes are ultimately borne by customers in the form of higher prices, 28 percent by workers as lower wages, and 20 percent by shareholders through lower returns on investment.
Finally, higher taxes put U.S. businesses at an economic disadvantage compared with foreign companies.
“As a result, companies are incentivized to locate their headquarters and operations in lower-tax jurisdictions,“ the chamber stated. ”This scenario played out in practice throughout the years leading up to 2017, when the United States had the highest statutory corporate tax in the industrialized world, causing many formerly U.S.-headquartered multinationals to re-domicile abroad.”
“A 15 percent corporate rate would be pro-growth, but it would not address the structural issues with today’s corporate tax base. Currently, businesses cannot fully recover their investment costs, as they must amortize R&D expenses over five (or 15) years, and bonus depreciation is beginning to phase out,” the post reads.
“These investment penalties will blunt any positive effects of a corporate rate reduction, repeating a mistake from past tax reforms.”
The Tax Foundation suggested that a lowering of the tax rate be paired with reforms broadening the tax base and removing penalties on investment.
The 2017 reductions were “rocket fuel” for U.S. manufacturers, leading to “record job creation, capital investment and economic growth,” the association stated.
It pointed out that manufacturing production grew by 2.7 percent in 2018, a year after the lowered taxes, with December 2018 being the “best month for manufacturing output” since May 2008.
In 2018 and 2019, capital spending in the manufacturing sector grew by 4.5 percent and 5.7 percent, respectively, showing the positive effect that reduced taxes have had.
However, if the pro-manufacturing tax provisions were to end next year, “virtually every manufacturer will face devastating tax increases,” the association said.