US Corporate Tax Increase Debate... Business Leaders "Biggest Obstacle" Yellen "Must Pay Fair Share"

Yellen Emphasizes Tax Justice Amid Corporate Backlash
Companies Say "Corporate Tax Hike Hinders US Investment"

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] U.S. Treasury Secretary Janet Yellen and corporations clashed over the corporate tax hike. While companies identified the corporate tax increase as the biggest risk factor for future management, Secretary Yellen argued that since the tax burden on companies is among the lowest worldwide, failing to resolve tax fairness issues could lead to declines in growth and productivity as well as loss of competitiveness.

On the 28th (local time), in a speech at the National Association for Business Economics, Secretary Yellen dismissed concerns that the Biden administration’s plan to raise the corporate tax rate from the current 21% to 26.5% to fund infrastructure investments would hinder economic growth.

Secretary Yellen stated, "The total tax revenue as a share of the Gross Domestic Product (GDP) in the U.S. ranks in the bottom 25% among advanced countries. The share of corporate tax in GDP is the lowest. Corporations must bear their fair share and contribute to the economy."

She also mentioned the ongoing push for a global minimum corporate tax, aimed at addressing concerns about reduced U.S. investment due to the corporate tax hike, saying, "We want to end the global race to the bottom on corporate taxes."

U.S. companies are opposing the Biden administration’s plan to raise the corporate tax rate. According to the third-quarter CEO survey results released that day by the Business Roundtable, a leading U.S. corporate group, respondent companies pointed out that the corporate tax increase poses the greatest threat to investment and employment plans.

Joshua Bolten, Chairman of the Business Roundtable, said, "Raising taxes by nearly $1 trillion on America’s largest job creators will be one of the largest corporate tax increases in history," adding, "The tax hike will make it harder for U.S. companies to compete and will deter investment in the U.S."

Secretary Yellen also explained in detail why the funds raised through the corporate tax increase must be invested in infrastructure. She said, "The cost of inaction is very clear," adding, "Addressing inequalities in the labor market and the broader economy will increase labor force participation, improve productivity, and boost Gross Domestic Product (GDP)."

She argued that infrastructure investment directly benefits vulnerable groups while indirectly benefiting everyone. Secretary Yellen countered concerns that infrastructure investment would lead to rising inflation and increased debt, stating that this is not the case.