Debate over big tax increase stalling progress on infrastructure package

Debate over big tax increase stalling progress on infrastructure package

June 10, 2021

Full article available at Arizona Chamber Business News.

In a glimmer of hope for American businesses, President Joe Biden’s administration appears to be steering away from hardline Democrats who want to impose the highest corporate income tax in the industrial world 28 percent. Total Spectrum Strategic Consultant and former Congressman Erik Paulsen cautions that this doesn’t necessarily mean the the threat of a harmful increase is going away anytime soon.

“It’s good that the new administration is floating new ideas as alternatives rather than just a straight increase to 28 percent, which is what many Democrats in the House and Senate would still like to see,” said Paulsen, a former leading member of the chief tax writing House Ways and Means Committee. “It’s important to really view these proposals with a lot of caution because the devil is in the details. There’s lots of fine print.”

Congress needs to act with care in considering changes to the current tax code, which came out of the Tax Cuts and Jobs Act of 2017 and has fueled jobs, innovation and tax revenues in Arizona, he said. “There is the potential that you would be giving up some very real economic incentives that are in the tax code right now and those could go away. These are incentives like research and development or clean energy for instance.”

Many small businesses are just now beginning to return to normalcy, surveys show. According to the latest MetLife & U.S. Chamber of Commerce Small Business Index, 59 percent of small businesses believe it will take more than six months to return to normal. That should be reason enough to hold off on a punishing tax hike right now, Paulsen said.

“We’re coming out of a significant economic crisis coming out of the pandemic and we don’t want to see that stall out —and it is stalling out right now. Unfortunately, despite the rebound, it’s not coming back out as robustly as it should be.”