As part of his infrastructure plan, President Biden is proposing to raise the federal corporate tax rate from 21 percent to 28 percent and broaden the corporate tax base. The administration projects the plan would raise $2 trillion over 15 years.
The CBO currently projects corporate tax revenues will be $3.5 trillion over the next decade. So Biden’s plan over its first decade would roughly increase corporate tax revenues 38 percent. In reality, his plan would not raise that much because corporations would respond strongly to avoid the increase, but this percentage gives a sense of the large size of the proposed hike.
Biden’s infrastructure plan promises to strengthen America’s competitiveness, but higher corporate taxes would do the opposite. The U.S. corporate tax rate is already higher than the global average, and Biden’s plan would make the rate even less competitive.
The chart shows data from KPMG for 2021. The U.S. federal rate is 21 percent and the average state rate is 7.5 percent. Taking into account that state corporate taxes are deducted against the federal tax, the current U.S. federal‐state rate is 27 percent. The KPMG data also accounts for subnational corporate taxes in other countries.
The current U.S. corporate tax rate is higher than the average global rate for 173 countries of 23.7 percent. It is also higher than Asia at 21.6 percent and Europe at 19.0 percent. With Biden’s increase, the U.S. federal‐state corporate tax rate would rise to 33.4 percent, far above the averages abroad.