The White House continues to receive heavy pushback on the proposed corporate tax hike that accompanies President Biden’s infrastructure spending plan. Given the substantial resistance that Biden’s proposal has received, it seems highly unlikely that it will pass in its current form. Instead of raising the corporate rate, we should ensure that all companies pay their fair share, prioritize tax collection enforcement and incorporate strategic tax policies that encourage responsible corporate behavior.
Much of the resistance that Biden’s proposal has received comes from those who worry that the substantial increase in corporate taxes to 28 percent will hamstring current competitive tax advantages for U.S. businesses. The concern is that this higher rate will shift investments overseas, reducing the amount of capital available for domestic labor, lowering their productivity and ultimately resulting in lower wages for every-day Americans. For this reason, many in the business world want to see smart tax credits coupled with any rise in corporate tax rates.
Large corporations have enormous potential to contribute to serious progressive change in this country, and one effective way to incentivize this is through a strategic tax code. Traditionally, the tax code has incentivized technological research and development investments but has not given credit to corporations that are making key contributions in other important areas, like job creation and career training, or the design of sustainable products. As examples, the research and development tax credit could be expanded to include sustainable product design and a parallel workforce training tax credit could be created to incentivize corporations to give underrepresented populations the skills they need to succeed in their careers. While technological advances are important, ensuring that corporations are investing in working class Americans and the future of our planet is equally crucial.
The recent COVID-19 pandemic and ensuing recession has amplified the importance of protecting and promoting American jobs. Imagine if certain employment sectors that account for large portions of this country’s workforce could be incentivized to further invest in their employees. Retail, for example, is responsible for employing 25 percent of the American workforce according to the most recent data, and tends to employ historically underrepresented populations. If the sector as a whole was motivated to prioritize their workforce and commit to their development, it would have an extremely positive effect on vulnerable communities across the country.
Reducing carbon emissions is another issue that is at the forefront of public consciousness, and one that corporations need to begin addressing as soon as possible. From the auto industry to clothing brands, companies will need to reassess how their products are manufactured and transported, in order to limit the amount of greenhouse gas emissions they produce. Retooling the corporate tax code to reward businesses who are already investing time and money into designing, creating and distributing these types of sustainable products, while incentivizing other corporations to follow suit seems like an obvious move for Biden’s administration, given their priorities.
As our country continues to rebound from the effects of the pandemic — physically and economically — while addressing the ever imminent threat of climate change, now more than ever is the time for fiscally responsible, innovative tax codes, that will take care of working class Americans, and prioritize the health of our planet, all while growing the economy.
Michael Patterson is the CEO of Interactive Outdoor Media Solutions and the owner of multiple Aarrow Sign Spinners franchises.