BIDEN TAX PLAN WOULD PUMMEL MOST STATES WITH COMBINED CORPORATE TAX RATES OF 30+ PERCENT

An analysis by the Washington-based nonpartisan Tax Foundation found that Joe Biden’s proposal to raise the federal corporate income tax rate to 28 percent would, for most states, increase the combined average top tax rate on corporate income to 32.4 percent, “Reducing U.S. competitiveness and long-run economic growth.”

The report stresses that it is important to include state corporate income taxes when considering how raising the federal rate would impact U.S. competitiveness. “Raising the combined U.S. corporate rate to the top rate in the Organization for Economic Co-operation and Development (OECD) would encourage corporations to depart the U.S. and reduce economic output and worker wages across the income spectrum. Retaining the 21 percent corporate rate ensures the U.S. remains an attractive location for corporate investment.”

“This plan would impact states like Illinois very negatively, and further plunge the it into a financial black hole,” said Jim Tobin, economist and president of the Taxpayer Education Foundation (TEF). “We are in an age of globalization and remote work. It is easier than ever for a company to move across state lines for lower taxes with minimal disruption. The argument that businesses will move to, let alone stay in Illinois because of its skilled workforce doesn’t hold water anymore.”

“If this tax increases passes, Illinois’ combined federal and state corporate tax rates would be 34.8%, the fifth-worst in the country. This will put enormous pressure on an already struggling economy, and will force entrepreneurs to think twice about starting a business in Illinois.  A higher corporate income tax would be nothing but destructive.”

Source: Biden Plan: Combined Corporate Rates Would Exceed 30% in Most States (taxfoundation.org)