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ICYMI: New Analysis Reaffirms That 2017 Tax Law Gave Corporations Big Tax Cuts, Failed to Substantially Expand Corporate Tax Base

September 22, 2021

In a new analysis, Seth Hanlon of the Center for American Progress concludes that, contrary to arguments by corporate lobbyists working to protect the corporate giveaways at the heart of the 2017 tax law the 2017, that law did not broaden the corporate tax base and raising the corporate tax rate for the most profitable corporations will help reverse the worst of the corporate tax cuts. The analysis reaffirms that addressing these inequities is valuable in itself, and also provides revenue for economic investments to support economic growth that benefits all Americans.

Hanlon makes the following points:

  1. Revenue estimates show that every percentage point increase in the corporate tax rate raises the same amount of revenue today as it did before 2017.

Hanlon:

  • If the 2017 tax law substantially broadened the corporate tax base, then one would expect every percentage point increase in the corporate tax rate to raise substantially more revenue than it did before its enactment. But that is not what Congress's official scorekeepers are estimating.
  • ...[F]our estimates suggest that every percentage point increase or decrease in the corporate rate equated to roughly $100 billion over ten years before TCJA — and still equates to roughly $100 billion now. That is not what one would expect if the corporate tax base had been substantially broadened.
  1. The December 2017 score of the 2017 tax law understates the size of the tax cut corporations received.

Hanlon:

  • Other opponents of corporate tax rate increases point to JCT's original estimate of TCJA and argue that corporations received only a very modest net tax cut. For example, former House GOP tax counsel George Callas has argued that the net corporate tax cut in TCJA was only about $300 billion over ten years.* That is a significant understatement of TCJA's net corporate tax cut.
  • Hanlon points out that these figures count $339 billion in one-time revenue from letting corporations repatriate their earnings at special low 8-15.5 percent rates, that its "base broadening" includes provisions affecting non-corporate businesses, and that many of these so-called "base broadeners" were designed to minimize the chances they would ever come into effect.
  1. Corporate effective rates and revenues show that corporations received massive tax cuts that are larger than originally projected.

Hanlon:

  • But we do not have to look at the scorekeeper's forecasts to see that TCJA has dramatically cut corporate taxes on net.
  • If TCJA had fully offset the corporate rate cut with base-broadening provisions, then neither corporate effective tax rates nor corporate [tax] revenues would fall. But they both fell dramatically.

Joseph R. Biden, ICYMI: New Analysis Reaffirms That 2017 Tax Law Gave Corporations Big Tax Cuts, Failed to Substantially Expand Corporate Tax Base Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/352650

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