[Congressional Record Volume 167, Number 72 (Tuesday, April 27, 2021)]
[Senate]
[Pages S2205-S2206]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                            Tax Legislation

  Mr. THUNE. Mr. President, a few weeks ago, President Biden introduced 
an infrastructure plan--or at least that is what the Democrats are 
calling it. In fact, a substantial portion of this bill goes to 
Democratic priorities that have nothing to do with infrastructure, from 
support for Big Labor to a new Civilian Climate Corps to advance 
``environmental justice.'' President Biden's infrastructure proposal 
would cost a lot of money, well north of $2 trillion.
  So how does the President plan to pay for this legislation? 
Unsurprisingly, the President is proposing tax hikes--notably, a 
substantial hike in the corporate tax rate.
  There are two sources the Democrats like to go to when it comes to 
paying for their spending--corporations and prosperous Americans. In 
fact, the Democrats tend to speak about corporations and well-off 
Americans as if they are a bottomless source of funding for government 
programs and as if the Democrats can endlessly hike taxes on these 
individuals and businesses without consequences.
  When the Republicans object to the prospect of major tax hikes, the 
Democrats cry that the Republicans are just protecting wealthy 
corporate cronies--a deeply ironic charge when you consider that the 
Democrats want to include a tax cut for wealthy Democratic donors and 
Hollywood types in this same infrastructure package.
  The real reason for the Republicans' concern, of course, is quite 
different. The Republicans are concerned about substantial tax hikes on 
any individual or business because we know that taxation has economic 
consequences. It is something that the Democrats should know as well--
it is basic economics, after all--but they don't seem capable of 
grasping it. Taxation has consequences. Tax hikes have consequences, 
and big tax hikes have big consequences, usually negative ones.
  The corporate tax hike the Democrats are talking about will have 
negative consequences for American businesses. That means it will have 
negative consequences for American workers, and that is a problem.
  Three years ago, the Republicans passed major tax reform legislation. 
Along with substantial tax cuts for middle-class Americans, this 
legislation cut America's corporate tax rate. Why? Well, at the time we 
passed this legislation, the United States had the highest corporate 
tax rate in the developed world, plus an outdated international tax 
system. Both of those things put U.S. businesses at a major 
disadvantage next to their foreign counterparts, and they discouraged 
foreign companies from moving to and investing in the United States.
  Our outdated tax system had also resulted in a wave of inversions. 
That is tax professional-speak for companies moving their headquarters 
overseas. According to Bloomberg, between 2004 and 2016, 36 American-
based companies

[[Page S2206]]

inverted. Needless to say, those inversions resulted in a loss of 
American jobs and domestic investment. A piece in the Wall Street 
Journal reported that one accounting firm estimates that the United 
States lost $510 billion from cross-border mergers and acquisitions 
between 2004 and 2016.
  The Republicans knew that if we wanted to boost job creation here at 
home and improve opportunities for American workers, we needed to 
address the high corporate tax rate and put American companies on a 
more competitive footing internationally, so we cut the corporate tax 
rate and brought the U.S. international tax system into the 21st 
century by replacing our outdated worldwide system with a modernized 
territorial tax system.
  It didn't take long to see the results: Inversions ended. Economic 
growth outstripped predictions. The poverty rate dropped. Jobs 
increased. Incomes grew. In fact, income growth in 2019 was the highest 
ever recorded, and the real median household income for African-
American, Hispanic, and Asian-American workers hit record highs. In 
other words, tax reform worked, and, importantly, it worked for the 
very people the Republicans wanted to help--ordinary Americans. By 
improving the tax situation for American businesses, we improved the 
job and income situation for American workers, but now the Democrats 
want to undo all of that.
  To pay for their preferred government programs, they want to 
substantially hike the tax rate on American corporations--once again, 
putting American businesses at a substantial disadvantage next to their 
foreign competitors. If the Democrats impose President Biden's 
suggested tax hike, the combined average top tax rate on corporations 
in the United States will be higher than that imposed by every one of 
our major trading partners and competitors, including China.
  It is difficult to understand why the Democrats think it is a good 
idea to put American companies at a disadvantage next to Chinese 
companies and next to British companies, Japanese companies, French 
companies, German companies, and the list goes on and on. It is 
especially difficult to understand why the Democrats would do this now, 
at the very time our economy is trying to recover from the serious hit 
we took from the coronavirus.

  Unfortunately, it has become clear that the Democrats are either 
incapable of grasping or don't care about the economic consequences of 
their proposed tax hikes. The Democrats are fixated on imposing a whole 
host of new government programs, and they are ready to tax Americans 
and American businesses to pay for them even if ordinary Americans 
suffer as a result. Presumably, they think that if ordinary Americans 
start suffering, they can just offer them some help through a new 
government program, but I am pretty confident that most Americans would 
exchange government assistance for the kinds of jobs and incomes that 
free them from having to depend on government programs.
  Substantially increasing the corporate tax rate--and I am talking 
substantially; what is being talked about is a 33-percent increase, so 
it will be a one-third increase in the tax rate--and putting American 
businesses at a disadvantage on the global stage is not the best way to 
encourage the creation of those kinds of jobs. Hiking the corporate tax 
rate will have negative consequences for our economy and for hard-
working Americans.
  It is easy to say ``Tax the corporations; tax the rich people,'' but 
those businesses hire American workers. If they have to pay more in 
taxes, they have to pay less in wages. What we saw, as I mentioned 
before, was the highest wage increases that we have seen in decades, 
particularly for lower income Americans.
  But apparently what is being talked about with this tax hike is just 
the beginning. President Biden and his Democratic colleagues have a lot 
more government programs they want to push, and they have a whole raft 
of tax hikes waiting in the wings to fund them. There is a hike in the 
top individual income tax rate that would hit small businesses hard. 
Most businesses--99 percent of the businesses in my State of South 
Dakota--are organized as passthroughs. That means they pay taxes at the 
individual rate. Those are farmers and ranchers and small business 
people across my State. They are the people who create the jobs in 
South Dakota. A hike in the top individual income tax rate hits every 
one of those small businesses that has an income in excess of $400,000. 
That is money that could be used to hire more workers. There is a hike 
in the capital gains tax, which would discourage investment and 
decrease the value Americans can expect from their 401(k)s, a new death 
tax that would hit middle-class families and family farms and 
businesses, and so much more.
  These tax hikes may help the Democrats usher in parts of the 
socialist fantasy they have been envisioning, but they will do nothing 
to help American families gain financial stability and secure good jobs 
and lasting, rewarding careers. Working Americans are the ones who will 
ultimately suffer the most from the Democrats' tax hike plans.
  I yield the floor.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The senior assistant legislative clerk proceeded to call the roll.
  Mrs. FISCHER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Padilla). Without objection, it is so 
ordered.