One million jobs would be lost in the first two years if the corporate tax rate increased to 28 percent and other policies went into effect, according to a new study from the National Association of Manufacturers (NAM).
NAM, in a study conducted by Rice University economists, calculated the impact of increasing the corporate tax rate to 28 percent, increasing the top marginal tax rate, repealing the 20 percent pass-through deduction, and eliminating certain expensing provisions.
Biden’s proposed $2.25 trillion infrastructure package would increase the corporate tax rate to 28 percent and establish a minimum global tax. The 2017 GOP tax law lowered the corporate tax rate from 35 percent to 21 percent.
The NAM study found that gross domestic product would be down by $117 billion by 2023, $190 billion in 2026, and by $119 billion in 2031.
“This study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: increasing the tax burden on companies in America means fewer American jobs. One million jobs would be lost in the first two years, to be exact,” NAM President and CEO Jay Timmons said in a statement.
It also calculated that ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023, $83 billion less in 2026, and and $66 billion less in 2031.
It touted the growth from the 2017 GOP tax law, including that manufacturing added 263,000 new jobs in 2018 and that manufacturing wages increased by 3 percent in 2018 and continued going up.
NAM last week voiced support for Biden’s plan, just not the way he wants to pay for it.
“Achieving our shared goals will be the result of debate, discussion and collaboration with the administration and both parties in Congress," Timmons said at the time.
Another recent analysis, conducted by the Penn Wharton Budget Model, found that corporate tax proposals in Biden’s infrastructure plan would raise revenues by $2.1 trillion over 10 years. It also said its revenue estimate of the tax proposals is at the lower end of what might be raised from the plan, since some of the proposals lacked enough detail for the researchers to model.
The White House has said that this is the beginning of the process and negotiations are just getting started, with Biden indicating he's open to other ideas to pay for the plan.
"We have to move now. Because I am convinced that if we act now, in 50 years people are going to look back and say, this was the moment that America won the future,” the president said when introducing the proposal in Pittsburgh.