Tax Increases to Outweigh Benefits of Biden Infrastructure Plan, Experts Warn  BY EMEL AKAN April 1, 2021

President Joe Biden speaks in Pittsburgh, on March 31, 2021. JIM WATSON/AFP via Getty Images

WASHINGTON—President Joe Biden has unveiled his ambitious infrastructure package, which proposes substantial tax increases on U.S. corporations to pay for the $2 trillion price tag. However, experts say the economic harm from an increase in corporate taxes will offset the benefits created by the infrastructure investment, raising skepticism about the plan.

Biden described his proposal as “the largest American jobs investment since World War II” in a speech in Pittsburgh on March 31.

By spending on infrastructure, Biden pledges to create millions of well-paying jobs, expand the economy, and make the United States more competitive vis-a-vis China.

The eight-year infrastructure plan will be fully paid for by tax increases on U.S. companies spread over 15 years. Increasing the federal corporate tax rate to 28 percent from 21 percent is one of the several ways proposed in Biden’s infrastructure plan.

Studies, including ones conducted by the Congressional Budget Office (CBO), however, show that raising taxes would lead to less investment, less productivity, fewer jobs, and lower wages.

The administration has to make the case for tax increases as “the benefits of the Biden infrastructure plan won’t outweigh the cost to the economy of the tax increases,” Scott Hodge, president of the conservative-leaning think tank Tax Foundation, said in a report.

“Federal investment financed by debt or taxes could do more economic harm than good because federal borrowing and taxes crowd out private investment,” Hodge wrote.

To avoid harming the economy, he said federal investments should be financed through cutting spending in other discretionary programs.

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