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Top business groups ripped a tax hike proposal unveiled by House Democrats on Monday, warning the sweeping increases outlined to fund President Biden’s $3.5 trillion budget reconciliation bill could derail the country’s ongoing economic recovery.
Biden and top Democrats have argued the tax hikes are necessary to fund a $3.5 trillion spending plan focused on projects, such as climate-friendly infrastructure, health care, child care and education, that will build a stronger long-term economy. But the Chamber of Commerce, the country’s largest business advocacy group, warned the tax hikes would "slam the brakes on hiring and wage increases."
"This is an everything but the kitchen sink bill that includes every policy idea the majority has been unable to pass," Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley said in a statement. "We will not find durable or practical solutions in one massive bill that is equivalent to more than twice the combined budgets of all 50 states.
"The success of the bipartisan infrastructure negotiations provides a much better model for how Congress should proceed in addressing America’s problems," he added.
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The House Ways and Means Committee’s proposal would increase the top corporate tax rate to 26.5% from 21% and raise the top income tax rate to 39.5% from 37%. The plan also includes a 3% surcharge on individuals earning more than $5 million annually and a capital gains tax of 25%.
The Business Roundtable, a group representing dozens of major companies including tech giants such as Amazon and Apple, warned the tax proposal was a "step backward for the U.S. economy that will harm all Americans – not just corporations and the wealthy."
"These measures would put millions of American jobs at risk, stunt wage growth, suppress business investment and innovation and once again make American companies more susceptible to foreign takeovers," the group said in a statement.
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The National Association of Manufacturers expressed similar concerns, arguing the proposal, if implemented, would force U.S. employers to cut jobs.
"Manufacturers are committed to rebuilding our economy and sustaining our recovery—even amid the surge of COVID-19 cases," the group said. "If lawmakers share that commitment, then they would rethink tax proposals like this. Few policies would stall our recovery faster. Now is not the time to pursue policies in Washington that will hurt the families and communities of manufacturers in America."
The Democrat-backed proposal would mark the most significant changes to the tax code since cuts implemented under former President Donald Trump in 2018. The proposed corporate tax rate is lower than the figure favored by Biden, who called for a 28% rate.
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Republican lawmakers have universally opposed the $3.5 trillion spending plan, which was passed along party lines and contains Biden proposals that were left out of a separate bipartisan infrastructure package. GOP leadership has vowed to oppose any effort to change the tax code.
"This will be a $3.5 trillion left-wing spending orgy designed to vastly increase the American people’s dependence on government," Rep. Devin Nunes, R-Calif., said during the Ways and Means Committee hearing.