Republicans for Higher Tax Rates

Individual and corporate income tax-rate hikes are on the table as the GOP negotiates its reconciliation bill

WSJ editorial. Excerpts:

"The Trump-Ryan 2017 . . . [resulted in] cutting the income tax rate to 21% from 35% while eliminating many tax loopholes. The reform ended so-called corporate inversions in which companies located overseas, and it induced a flood of capital locked overseas to return to the U.S. It made the U.S. more competitive again with corporate rates around the world."

"Tax revenue from the corporate tax also surpassed the predictions of the Joint Tax Committee and Congressional Budget Office. In June 2017, before tax reform passed, CBO predicted corporate tax revenue of $383 billion in fiscal 2021. But in April 2018, after reform passed, CBO lowered its estimate to $327 billion. Actual corporate tax revenue in 2021 was $372 billion—nearly as much at a 21% rate as CBO expected at the 35% rate that was among the highest in the world.

Corporate tax revenue has continued to increase and in fiscal 2024 was 1.8% of GDP, above the 1.7% average over the previous 30 years."

"Some Republicans now want to raise the top rate while also increasing the SALT deduction. This makes no sense since nearly all of the benefits of SALT go to rich taxpayers in high-tax states. The trade-off is even worse than that because the top marginal rate is the one that hits the next dollar of income, which is what matters as an incentive to work and invest. Raising the 37% rate would be especially damaging to small businesses, most of which pay taxes under the individual code."