According to a new study from the National Association of Manufacturers, President Joe Biden's plans to significantly increase taxes to pay for his $2.25 trillion infrastructure bill would cost the U.S. economy a whopping one million jobs in just two short years.
The study, conducted by economists at Rice University in Texas, found that if Congress approved the Biden administration's proposals to raise the corporate tax rate from 21% to 28%, pare back tax preferences for so-called pass-through businesses, and increase the capital gains tax on wealthy Americans, among other measures, the result would be devastating for the economy.
"Total employment, measured by hours worked, would fall by 0.7% initially before moderating. The reduction in hours worked would be equivalent to an employment decline of approximately 1 million full-time jobs in 2023," the economists concluded. "Those jobs would still be gone in 2026 before stabilizing."
"The average annual reduction in employment would be equivalent to a loss of 600,000 jobs each year over 10 years," they added.
Biden's so-called infrastructure plan — the bulk of which does not pay for highways, bridges, and roads but funds progressive policy initiatives such as climate research, education, and green energy — is slated to cost more than $2 trillion. To pay for the plan, the administration has proposed the largest tax hike in nearly 30 years.
Included among the tax increases is a hike to the corporate tax rate, which Republicans lowered to 21% from 35% during Donald Trump's presidency. The move was aimed at giving the U.S. a competitive global advantage and preventing American businesses from relocating offshore in search of lower tax rates.
By raising the corporate tax rate to 28%, that competitive advantage would be lost, NAM said in a summary of the study's results. "The conclusion of this study is inescapable — following through with tax hikes that give other countries a clear advantage will mean far fewer jobs created in America."
The administration may have to seek alternatives for paying for the plan if it is to have any chance of passing in Congress, as some moderate Democrats are balking at the tax hikes, along with every Republican.
Last week, swing-vote Democrat Sen. Joe Manchin (W.Va.) threw cold water on the plan, saying he wouldn't support it as is. He specifically cited concerns with raising the corporate tax rate.
"This study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: increasing the tax burden on companies in America means fewer American jobs. One million jobs would be lost in the first two years, to be exact," NAM President and CEO Jay Timmons added in a statement.
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