Will the proposed tax increase affect the performance of US companies?
According to news reports Monday, the Democratic House of Representatives Committee on Ways and Means plans to raise the US corporate tax rate, and according to the proposal, corporate taxes may be increased by 18% on income for companies less than $400,000. The proposal also stipulates an increase in the tax to 21% on corporate income of up to $5 million, and to about 26.5% on corporate income above $5 million.
And US President Joe Biden had proposed last April to increase corporate taxes to 28%, after it was 21% during the era of former President Trump, with the aim of helping to finance infrastructure spending within the United States within the American jobs plan, and the US President indicated that no There is any evidence to suggest that the new tax increases will cause companies to flee the United States of America, in addition to that the tax increase will not harm the American economy, but does it really make sense that American companies are not affected by these taxes?
It cannot be certain that companies will not be affected by these possible new tax increases, especially that they will deduct funds from corporate profits and give them to the US Treasury. It causes damage to the ideas and plans of American companies in this aspect.
Also, American companies, in light of the tax increases, may try to leave the United States and invest their money in less tax-imposed countries in an attempt by these companies to maximize their investments, especially since there are many developed countries that offer a low tax rate to encourage large companies to transfer their investments to them. Thus, this step may encourage American companies to take the initiative to implement this step.
In the end, it can be said that increasing taxes on American companies is a double-edged sword, as the first limit may be to increase the state’s tax revenues, and then this may contribute to reducing the budget deficit, increasing spending on American infrastructure projects and enhancing the performance of the American economy, while on the On the other hand, concerns about reducing or reducing the investment activities of companies and perhaps fleeing the United States may be one of the damages resulting from this step, the results of which we will know in the coming days.