How would raising corporate income taxes affect U.S. employers and their workers?

Raising the 21% corporate tax rate or the U.S. tax on foreign income (GILTI) would make it even more difficult for American companies to compete in global markets. With 95% of the world’s population and 75% of the world’s purchasing power outside the U.S., American companies need to compete and win overseas. If they do not, that will mean fewer U.S. jobs and less investment, because foreign-headquartered companies will take advantage of a tilted playing field to win global market share.

A higher corporate tax rate would make it harder for U.S. companies to compete globally, including with China. Today, the combined federal and average state corporate tax rate in the U.S. is 25.8% — higher than China’s 25% regular tax rate and much higher than China’s preferential 15% tax rate for high tech income. Even with a 25% federal corporate tax rate, when added to state and local taxes, America would be one of the highest-taxed countries in the industrialized world — well above China and our major trading partners.

Likewise, raising taxes on income earned from the foreign operations of American companies would widen the already large tax gap between American companies and their foreign competitors, who don’t face any additional tax on their foreign income. Increasing U.S. taxes on the foreign business income of U.S. companies would result in more U.S. companies being acquired by foreign companies, since these businesses would instantly become more profitable once headquartered outside the United States.