A new analysis of tax hikes proposed by several leading 2020 Democratic presidential candidates has found they would lead to an overall loss of about 413,000 jobs.
Former vice president Joe Biden, Sen. Elizabeth Warren (D., Mass.), and other 2020 Democratic contenders have pledged to reverse President Donald Trump’s 2017 tax cuts and bolster corporate tax rates to as high as 35 percent to fund expensive new government programs.
But the Tax Foundation says in its analysis such hikes will discourage new corporate investment which then will limit wage growth, employment, and productivity.
“The corporate income tax is the most harmful tax to economic growth, so it shouldn’t be seen as a good option for funding various policy proposals,” Erica York, the economist who compiled the study, the Washington Free Beacon.
The GOP/Trump tax plan cut corporate tax rates from 35 percent to 21 percent, more in line with other western nations, though some, such as Ireland’s 12.5 percent rate, are much lower.
The tax reduction has been a top target for leading Democratic contenders for the party’s 2020 nomination, even though the tax cuts have spurred economic growth in the U.S., according to most economists.
Biden wants to return the corporate rate to 28 percent while Warren, Sen. Bernie Sanders (I-Vt.) and South Bend Mayor Pete Buttigieg want the rate to go back to 35 percent.
The Tax Foundation study said all of those rates would harm the economy and stunt growth.
Biden’s corporate tax plan will cut the GDP by 1 percent and eliminate some 187,000 jobs from the U.S. economy. The plan backed by Warren, Sanders, and Buttigieg would leave 413,000 people without jobs.
York said that returning to pre-2017 tax levels will restore corporate tax burdens to exceptionally high levels compared with other leading industrial countries.
“When we had a 35 percent rate, we were an outlier amongst most of our competitors,” she said.
“We had one of the highest corporate tax rates in the industrialized world. Lowering it made us more competitive, raising it back up would be a step in the wrong direction.”