Central Planners Love (and Need) Higher Taxes

With numerous provisions of the Tax Cuts and Jobs Act of 2017 set to expire next year and renewed attention to the ballooning federal debt, U.S. lawmakers on the left and even some on the right have considered increasing the corporate tax rate, which the TCJA permanently lowered to 21 percent back in 2018. Most notable in this regard is President Joe Biden, who, along with many congressional Democrats, has supported raising the rate to 28 percent. Recently, however, Biden's been joined by a small handful of Republicans in Congress--including Chip Roy in the House and populist Sens. Josh Hawley and J.D. Vance--who have either played footsie with increasing corporate taxes or openly supported a rate hike. As the Mercatus Center's Veronique DeRugy explained last week and as we covered here in Capitolism's early days, the economics of corporate taxes are pretty well settled: They distort business decisions, are generally considered a poor way to raise revenue, and their ultimate burden falls not on the company itself but on a mix of its shareholders, workers, and customers, with economists disagreeing about the exact share each group bears. Nevertheless, tax hikers like Biden support increasing corporate tax rates because they do raise revenue and/ or, thanks to voter ignorance of the economics, are easy to demagogue. ("Only a libertarian fundamentalist monster could be against taxing Big/ Woke Corporations as much or more than American Workers!" Sigh.)