Wall Street Journal Explores How Higher Corporate Tax Rate Would Affect United States

In 2017, U.S. lawmakers approved legislation that reduced the United States’ corporate tax rate to 21 percent, a rate that is still higher than in many developed countries. The change was permanent, meaning it will not expire unless lawmakers change the law.

With the country facing a rising national debt and other pressures, however, there are proposals to reverse course and raise the rate.

In a recent news story, The Wall Street Journal explored how such a reversal would affect the country’s growth and its largest companies. The Journal determined raising the corporate rate would reduce companies’ ability to invest in expanding operations and force them to raise consumer prices, curb plans for expansion and new hiring, and move operations to other countries.

Additionally, “A higher tax rate now would be more punishing than it would have been 10 years ago,” The Journal said. “That is because the 2017 cut to 21 percent broadened the tax base, meaning more income is taxed at a certain threshold.”

The Wall Street Journal is not the only entity examining the potential effects of a corporate rate increase. According to the nonpartisan nonprofit Tax Foundation, with a 28 percent corporate rate, by 2034, for every $1 of higher revenue on a conventional basis, U.S. gross domestic product would decline by $1.84. Read the Tax Foundation’s full analysis at this link.