The Biden administration has ambitious plans to spend over $2 trillion – an alleged “one-time” capital investment in our nation’s infrastructure. This spending is to be paid for largely by higher taxes on corporations. Biden’s “soak the rich” campaign rhetoric included a promise not to raise taxes on anyone earning under $400,000 a year. My question: Is his proposal to raise the corporate income tax rate from 21 to 28% breaking his promise?
Who bears the burden?
This week, I welcome the Wall Street Journal’s U.S tax policy reporter Richard Rubin to the show to help break down the concept of tax incidence, and explore the hidden downstream effects of increasing taxes on “the rich.” Rubin is a neutral observer with no particular agenda other than to help readers understand what to expect when politicians in Washington D.C. change the tax code.
The key question, Rubin says, is who actually pays the price? The corporations themselves? Corporate profits will suffer, as Biden seems to expect, as will the shareholders. But what about workers who depend on corporate investment in capital to enhance their productivity, and pay them living wages?
Jobs, Jobs, Jobs
The President assures us that the infrastructure bill will boost jobs, but we must always make visible the unseen effects of pulling a dollar out of the private sector in order to spend it elsewhere.