Corporate income taxes? Warren has a plan for that, and the right-leaning Tax Foundation is skeptical about it.
Massachusetts Senator Elizabeth Warren, who is running for the Democratic Party’s presidential nomination, voted against the Tax Cuts and Jobs Act of 2017, which is President Donald Trump’s signature tax cut.
If she became president and successfully enacted her agenda, Warren would increase the corporate tax rate from 21 percent up to 35 percent (where it used to be before Trump took office) and enact a 7 percent surtax on a corporation’s profits exceeding $100 million.
According to analysis put out by the Tax Foundation on Wednesday afternoon, Warren’s corporate tax rate proposals would generate an additional $3.38 trillion in tax revenue from 2021 to 2030. In that same timespan, however, it would eliminate 722,000 full-time jobs, slash wages by 3.1 percent, and decrease the Gross Domestic Product by 3.7 percent. The value of capital stock would fall by 8.7 percent, according to the analysis. The decrease in wages would affect every earning bracket.
For those in the lowest income quintile, wages would fall 3.67 percent, according to the report. In the second-lowest quintile, they would decrease by 3.17 percent. In the middle quintile, they would drop by 3.21 percent. In the second-highest quintile, they would fall 3.09 percent. And those in the top quintile would see their earnings fall 4.11 percent, according to the report.
Of the six Democrats whose plans the Tax Foundation analyzed — Warren, former Vice President Joe Biden, former New York City Mayor Mike Bloomberg, former South Bend Mayor Pete Buttigieg, Minnesota Senator Amy Klobuchar, and Vermont Senator Bernie Sanders — Warren’s proposal had the second most negative economic impact behind Sanders.
Erica York, an economist with the Center for Federal Tax Policy at the Tax Foundation, conducted this analysis.
She told New Boston Post that while the proposals of each of the six Democrats would hurt wages, jobs, capital stocks, and Gross Domestic Product growth, Warren’s is the most concerning.
“While all the Democratic candidates propose increasing corporate taxes, Warren’s proposal is significantly larger, and thus more economically damaging, than many of the other ideas raised by the 2020 candidates,” York said in an email message. “Her corporate tax proposal would dramatically reduce the global competitiveness of the United States as a location for business investment, reduce economic output and wages, and hurt people across the income spectrum.”
Additionally, Paul Craney, executive director of the Massachusetts Fiscal Alliance, said it’s another example of how a Warren presidency would hurt the country.
“Senator Warren should be advocating for policies that expand our economy,” he told New Boston Post in an email message. “You don’t need to go to Harvard to tell you that. The Senator is more focused on burdening the next generation of taxpayers with debt and economic reductions for her zealous overspending.”
Warren has yet to address the Tax Foundation’s findings. Attempts by New Boston Post to reach a spokesman for Warren’s presidential campaign for comment since Thursday, February 20 have been unsuccessful.
The Tax Foundation analysis also found that Klobuchar’s tax increase proposal would result in the fewest jobs lost among the major Democratic candidates. Her proposal to raise the corporate income tax rate from 21 percent to 25 percent would eliminate 103,000 full-time jobs and cut wages by 0.4 percent while generating $716 billion in revenue over a 10-year span, according to the report.
For comparison, the Tax Foundation found that the Tax Cuts and Jobs Act enacted by President Donald Trump in December 2017 would result in a 1.5 percent wage increase, 1.7 percent Gross Domestic Product growth, and 339,000 full-time jobs created while decreasing federal tax revenue by $1.47 trillion over the span of a decade.
