The large corporate tax increase in President Joe Biden’s proposed 2024 budget would hurt Utah businesses, according to Utah Republican Rep. Blake Moore.
Moore had a chance to question Treasury Secretary Janet Yellen on Biden’s proposal at a House Ways and Means committee hearing Friday. Later on Friday, he spoke to the Deseret News about his thoughts on the budget and on the debt ceiling debate.
“I am concerned ... that they’re just going to raise (corporate taxes) just to cover more spending that we’re seeing from the president’s budget,” Moore said to Yellen. “What am I to tell these companies and individuals?” He said that the proposed increase from 21% to 28% would be an enormous burden on companies in his district.
Yellen agreed with Moore that before Republicans lowered the rate in 2017, the previous corporate tax rate was too high compared to others around the globe. But she said she believes lowering the rate to 21% caused a “race to the bottom,” that could reduce future federal revenue collection when additional funds are necessary “for essential investments like those proposed in the president’s budget.”
During his questions, Moore referenced business leaders in Box Elder County who told him they were able to give raises to employees because Congress lowered the corporate tax rate. But Yellen said the Treasury hasn’t seen the “economic payoff in the form of great increases in investment spending” to make the tax decrease worth it.
Due to time constraints at the hearing, Moore wasn’t able to ask a follow-up question. But the Deseret News caught up with him shortly after the hearing to ask about why he views the low corporate tax rate differently than the Biden administration.
“Democrats aren’t looking at those second and third order benefits to lower taxes,” the congressman said. “Middle class wages significantly increased since the 2017 Tax Cut and Jobs Act.”
He further claimed the federal government’s record tax revenue collection in recent years is partly due to Republicans lowering the tax rate. Moore is concerned Americans could lose jobs if the federal government “starts creeping (the tax rate) back up to where it’s an easier decision for companies to offshore some of their work.”
What’s in Biden’s 2024 budget proposal
Democrats have criticized the Republican 2017 tax reform bill for cutting taxes that benefited the rich, a line used again Thursday by Biden when he gave a speech about his budget proposal.
“For too long, working people (have) been breaking their necks, the economy’s left them behind — working people like you — while those at the top get away with everything,” Biden said to a crowd gathered at a Pennsylvania union hall.
The president’s budget requests a tax increase in order to increase funding for defense, immigration, health care and clean energy programs. Biden’s 2024 budget would cost $6.8 trillion, significantly increasing federal spending from his $5.8 trillion 2023 budget proposal.
Biden proposed tax increases on the wealthy as a means to fund his plan. The president says his budget will cut the deficit by $3 trillion over the next decade.
Besides raising the corporate tax rate, Biden proposed raising the individual tax rate to 39.6% from 37% and hiking the take rate for top income earners on Medicare to 5% from 3.8%.
He also pledged to raise taxes on the wealthy to shore up support of Social Security.
Republican response to the budget proposal
Biden’s budget request is largely considered dead on arrival in Congress. With the House controlled by the Republican majority and a Democratic Senate majority, the White House will have to negotiate with lawmakers in both chambers — and parties — to find a compromise deal.
Related to that, House Speaker Kevin McCarthy and fellow Republicans have threatened to block an additional debt ceiling limit increase unless Biden agrees to rein in federal spending, but Biden’s budget disregards those demands.
At the hearing, Yellen likewise urged Republicans to raise the debt limit “without conditions and without waiting until the last minute.”
Moore told the Deseret News that Biden will “not get Republicans to support a irresponsible debt ceiling increase.”
“We have to make some significant changes in reduction of costs and reduction of spending,” Moore said before mentioning that the GOP goal is to incentivize a cultural shift by reinstating “Clinton-era work requirements” for those on government welfare programs.
Moore also said Republicans have proposed terms for budget negotiations they want Senate Democrats to agree to before they come to the table. They no longer want to fund government through continuing resolutions, but instead want Congress pass regular appropriation bills.
His comments mirrored some of what his colleagues in the House Freedom Caucus said Friday that they would like to see from the White House before agreeing to a debt ceiling increase.
On Friday, Utah GOP Sen. Mike Lee tweeted his support of the House Freedom Caucus’ budget demands, which include: restoring Clinton-era work requirements for welfare programs, and top lining discretionary spending at 2022 levels for 10 years with only a 1% annual growth rate, which they say will save money “by cutting the wasteful, woke and weaponized federal bureaucracy.”
Moore said he is optimistic that the two sides can work it out if they are willing to negotiate. Time to approve a debt ceiling limit increase is quickly running out as the Treasury has indicated it is already utilizing “extraordinary measures” after the country hit the current debt ceiling in January.
“We are ready to negotiate,” Moore said. “The Speaker’s office has reached out again and now that the (president’s) budget request is out, hopefully he’s willing to engage and do a thoughtful, good faith negotiation.”