Yellen: Asking if tax increases will hurt economy ‘not the right question’

Treasury Secretary Janet Yellen argued in an interview published Sunday that those who question whether any hikes to the corporate tax rate or tax rates paid by the wealthiest Americans would hurt the economy are asking “the wrong question.”

Speaking with CNN via email, Yellen contended that the Biden administration’s infrastructure plan balanced middle-class tax cuts and investment in infrastructure with taxes on the wealthy and corporations that, coupled together, would spur growth.

“Asking ‘will these tax increases hurt the economy?’ is not the right question,” Yellen told CNN. “The right question is: ‘Is trading higher taxes on high-income taxpayers for middle-class tax cuts and major economic investments pro-growth?’ And the answer to that question is a resounding yes.”

“The greatest threat to our economic recovery — and our long-term economic prospects — is not a marginally higher tax rate for large corporations or the top 1% of taxpayers,” she went on. “It’s a lack of support for America’s workers and families.”

Yellen also appeared to knock previous efforts by Republicans to lower the corporate tax rate as a “race to the bottom on tax rates,” adding that the Biden administration’s plan corrects an “imbalance between what our government takes in as revenue and what it needs to invest.”

The administration is proposing raising the corporate tax rate to 28 percent and raising some taxes on Americans making $400,000 or more per year as a means of paying for a $2.3 trillion package of legislation dealing with infrastructure as well as issues such as child care and universal pre-k. The corporate tax rate proposed by Democrats is lower than the rate instituted by the U.S. before the GOP tax cuts of 2017, which lowered it from 35 percent to 21 percent.

Yellen and other administration officials have defended the plan and its payment methods as necessary to spur long-term growth while addressing critical issues including failing roads, bridges and tunnels as well as addressing climate change.

Republicans have attacked the plan, criticizing it for including provisions they say have nothing to do with infrastructure, while arguing that a compromise around a much smaller piece of legislation could be found.

Tags Infrastructure Janet Yellen Joe Biden
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