Corporate tax hike to hit middle-class Americans, study shows
Majority of taxpayers who would bear brunt of hike would have incomes below $500K
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Republican lawmakers on Monday released an analysis showing that even a slight corporate tax increase would have a negative effect on middle-class Americans and small businesses.
The study was released by Sen. Mike Crapo, R-Idaho, and Rep. Kevin Brady, R-Texas, and conducted by the Joint Committee on Taxation.
The JCT analyzed the economic effects of raising the corporate tax rate to 24%, 25% and 28%. The corporate tax rate was lowered to 21% from 35% by the 2017 Tax Cuts and Jobs Act.
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The study found that over the course of 10 years, more than 66% of the taxpayers who would bear the burden of increasing the rate to 25% would have incomes below $500,000.
About 169 million of the 172 million – or 98% – of the taxpayers who would be hit by that slight hike have incomes below $500,000.
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Increasing the corporate tax rate to 25% would raise an estimated $27.7 billion from taxpayers in 2022 alone.
"This study supports what we’ve long known--corporate tax hikes are primarily borne by workers and retirees, and certainly the middle class/those making well below $400,000 a year," Crapo and Brady said in a statement. "Now is not the time to raise taxes on the very people we are asking to lead us out of this crisis."
Brady and Crapo added that a separate study showed that a corporate tax increase would hit 1.4 million small businesses that were organized as C corporations.
They also said that corporate tax hikes would hurt retirees since 107.8 million taxpayers have some ownership in U.S. corporations via pensions, IRAs and other retirement accounts.
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President Biden has proposed raising the corporate tax rate to 28%, which is lower than what it was before President Trump’s administration slashed it to 21%.
The proposal is part of several tax increases the administration had proposed as a means to pay for various spending packages.
The administration has repeatedly said it will not raise tax rates for anyone earning less than $400,000.