What a Corporate Tax Rate Change Could Mean
With the presidential election just two months away, finance chiefs at companies nationwide are wondering how to plan for potential changes to the corporate tax rate (The Wall Street Journal, subscription).
What’s going on: “Vice President Kamala Harris has endorsed increasing the levy, currently at 21%, to 28%, echoing what the Biden administration has proposed. Republican presidential nominee Donald Trump, meanwhile, recently told executives he wanted a 20% corporate tax rate and has floated a levy as low as 15%. Neither may get the respective rates if their party doesn’t gain full power of Congress.”
Why it’s important: Because 2017 tax reform broadened the tax base while lowering the rate, an increase now would hit businesses harder than it would have a decade ago, potentially “slow[ing] plans for growth.”
- It would also hit consumers, who would be forced to pay more for everyday services and goods.
- A lower corporate tax rate, on the other hand, “would free up cash for investments, finance chiefs said … incentiviz[ing] companies to keep business operations in the U.S.”
Manufacturers speak out: Prior to tax reform, America’s 35% corporate tax rate was among the highest in the world, making the U.S. an outlier and harming its ability to attract manufacturing investment. That’s why the NAM is calling on Congress to preserve tax reform in its entirety—including the 21% corporate tax rate.
Making plans: Financial leaders at manufacturers are looking at the impact of potential changes to the tax rate.
- U.S. food company Conagra Brands “is modeling different tax rates” to see how they will affect its balance sheet, CFO Dave Marberger told the Journal.
The last word: “America’s manufacturing economy depends on Congress maintaining a globally competitive corporate tax rate,” said NAM Vice President of Domestic Policy Charles Crain. “Tax reform’s corporate rate cut led to the best year for manufacturing job creation in more than two decades—jobs that could be at risk if Congress increases taxes on manufacturers in America.”