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Democratic presidential nominee Joe Biden said during an ABC News town hall Thursday he would seek to dramatically raise taxes on job-creating corporations and wealthy Americans despite lingering economic malaise caused by COVID-19-related business closures and lockdowns.
After moderator George Stephanopoulos asked the former vice president if he planned on raising the corporate tax rate even as the economy continues to struggle amid the pandemic, Biden responded, “Absolutely.”
Throughout his candidacy, Biden has said he would move to repeal and eliminate tax cuts passed by the GOP-controlled Congress and President Donald Trump in December 2017.
If he does, that means the U.S. corporate tax rate of 21 percent — still higher than many other first-world nations — would revert back to nearly 39 percent and likely lead to a reduction in job creation, according to some economists.
Biden also pledged to raise income taxes on Americans making more than $400,000, though earners in that bracket already pay vastly more in taxes than roughly 90 percent of all other earners.
“When I said the Trump tax cuts, about $1.3 trillion of the $2 trillion in his tax cuts went to the top one-tenth of 1 percent,” Biden said during the town hall. “That’s what I’m talking about eliminating. Not all the tax cuts that are out there.”
Biden said he would keep the Trump tax cuts for middle-class Americans but added that he would still repeal the majority of cuts that went to wealthier earners even if the economy continues to sputter amid a lingering pandemic.
He then claimed the new revenue would be used to provide economic relief and create jobs, though he wasn’t pressed on how tax increases would lead to new jobs or who and which industries would be creating them.
“If you made sure that people making over 400 grand paid what they did in the Bush administration. It goes up to … another $92 billion,” Biden said. “So, you can raise a lot of money to be able to invest in things that can make your life easier.”
By comparison, President Donald Trump repeated an earlier pledge to cut taxes for the middle class again and further reduce the corporate rate from 21 to 20 percent during a separate town hall on NBC.
In 2016, the top nominal U.S. corporate tax rate was 38.92 percent, the third-highest top marginal rate in the world at the time.
After the rate was cut to 21 percent by the Tax Cuts and Jobs Act of 2017, job creation in the U.S. skyrocketed — from roughly 144 million employed in September 2016 to about 153 million before COVID shutdowns began earlier this year, according to the Tax Foundation.
That growth was continuing, as The New York Times reported earlier this year, ahead of massive lay-offs and job losses beginning the following month. The U.S. “economy churned out a blockbuster number of jobs” — 273,000 — in February, the second straight month of strong job growth, the paper reported.
Now, seven months later, job losses of 22 million in March and April have been halved, thanks in large part to the Trump-GOP tax cuts, the Tax Foundation reports.
“This bounceback of the U.S. economy can be attributed to multiple factors, including accommodative policy by the Federal Reserve and fiscal measures enacted during the crisis, which helped bolster liquidity and consumption,” the organization noted in an analysis published Thursday.
“One underappreciated factor may be the Tax Cuts and Jobs Act (TCJA), which instituted a number of pro-growth measures including a reduction in the corporate tax rate from 35 percent to 21 percent beginning in 2018, substantially reducing the tax burden on business investment and boosting after-tax earnings,” the analysis added.
“Perhaps as important to the economic recovery this year has been the TCJA’s boost to corporate after-tax earnings and liquidity leading up to the pandemic,” it continued.
“This was largely due to the lower corporate tax rate and changes to the international tax system that reduced the incentive to keep earnings abroad, leading to a sharp increase in repatriation, the process by which companies bring overseas earnings back to the United States,” the analysis said.
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