EDITOR’S NOTE: This editorial was written by U.S. Sen. Rob Portman (R-Ohio) for the Wall Street Journal. It can be viewed in its entirety here.
The Biden administration and congressional Democrats’ $2.7 trillion “infrastructure plan” is deeply concerning. Republicans and Democrats agree on investing in America’s infrastructure — the roads, bridges, electrical grids, railroads and broadband networks we all use.
The last infrastructure bill passed by Congress, 2015’s Fixing America’s Surface Transportation Act, cost about $300 billion and passed 359-65 in the House and 83-16 in the Senate.
The Biden plan broadens the definition of infrastructure to include more than $2 trillion in funding for things like the National Science Foundation, long-term care, corporate child care, and electric-car companies. Some are worthy causes, but they don’t belong in an infrastructure bill.
About $600 billion of the plan isn’t paid for and will take the nation further into debt. Democrats will pay for the rest of the plan with an enormous tax increase, the burden of which would ultimately be borne by American workers and consumers. It would make the U.S. less competitive in the global economy, reversing progress made in the past few years.
The 2017 tax reforms — which the Biden proposal would largely dismantle — unleashed record growth in jobs and wages and produced the lowest poverty rate since the government started tracking it 60 years ago.
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Mr. Biden’s proposed tax hikes would put all this U.S. investment, job creation and research at risk. Under the Biden plan, the combined federal and state corporate tax rate would go from 25.8% — already above the average rate of 23.4% for other developed countries — to 32.8%, the highest rate in the developed world. The U.S. tax rate would again be higher than China’s.
The abrupt tax hikes — five times as large as the corporate tax cuts in 2017 — would reduce the competitiveness of American workers and businesses right as the U.S. economy starts to recover from the pandemic.
The Biden plan would also double the tax on “global intangible low-taxed income,” or Gilti, making it more costly for U.S. companies to operate globally. This unfairly punishes American workers who support international sales.
In Ohio, companies like Procter & Gamble rely on overseas production to serve foreign markets in an affordable manner, which helps them employ thousands of Ohioans who support those foreign operations. The proposed Biden tax increases would hamstring the ability of these companies to compete overseas, resulting in lost American jobs.
The Biden administration also proposes to eliminate a provision of the tax code regarding what’s called foreign derived intangible income, or FDII. This 2017 rule encouraged American companies to bring their intellectual property back to the U.S. and keep it here. Google, Qualcomm and Facebook brought intellectual property home, and companies such as Intel and Disney kept theirs in the U.S. because of this incentive.
The Biden administration claims that it wants the U.S. to be more competitive, yet its tax increases would do the opposite. In a telling admission, Ms. Yellen asked other countries earlier this month to raise their corporate tax rates to ensure “a more level playing field.”
Those countries understand competition. They’re ignoring her advice and lowering rates. Ireland’s finance minister has indicated that his country has no interest in raising taxes.
Multiple studies, including from the nonpartisan Congressional Budget Office, show that workers will bear most of the burden of higher rates in the form of lower wages and lost jobs.
Instead of a $2.7 trillion plan that goes way beyond any definition of infrastructure and is paid for with tax hikes on workers and the economy, let’s go back to the proven model: a bipartisan bill focused on real infrastructure with sensible funding mechanisms.
Partisan tax hikes will only make America uncompetitive again, hurting American workers and their families.
