For the Record: Biden's Corporate Tax

Cartoon by Clifford Berryman, June 1933, via Wikipedia. More material on the issues being faced then here, but (spoiler) it wasn't Roosevelt's idea to replace income tax with a sales tax..

 

Bos sent me this thread from Stephanie Kelton offering suggestions for forgetting about a hike on corporate taxes (or living with Manchin haggling the hike down, I'm not sure which). Also some corroboration for my hypothesis that she lacks clear concepts of how the budgeting process works and what Biden and Yellen are planning for the tax system. Both her ideas are pretty good, too, I hafta say, but don't offer good reasons for giving up on the tax hike:

@Yastreblyansky any thoughts on this? If the Dems can’t get the 28% incr. on Corp. taxes, what happens to the infrastructure bill? Reduce programs? Get other taxes? Or her 2 suggestions. https://t.co/IbbaCwh5bX

— Boswood - for a Job Guarantee (@Bosengood) April 14, 2021

Congress has no choice but to appropriate but to make up the shortfall with "liquidating appropriations". Since infrastructure spending is going to be hugely about contractors, they'll need to build in that kind of flexibility anyway. It's absurd to think they'd try to...

— Per Aspera Ad Yastra (@Yastreblyansky) April 15, 2021

I agree about a million percent with Kelton's proposal to enforce existing tax law. It should be a top priority to beef up IRS staff and improve enforcement. Biden and Yellen are absolutely on that https://t.co/GZjcCxHj3K

— Per Aspera Ad Yastra (@Yastreblyansky) April 15, 2021

Given that we've just taken out $4 trillion or whatever in loans to pay for emergencies, maybe we should think of the tax increase as helping compensate for that--money being fungible, the loans contribute to infrastructure and corporate taxes contribute to Covid aid.

— Per Aspera Ad Yastra (@Yastreblyansky) April 15, 2021

The other side is I think it's essential to make a big tax move now, to have it in place before rising inflation gives the Fed jitters and makes borrowing harder. But the fiscal point in the previous tweet offers a good rationale.

— Per Aspera Ad Yastra (@Yastreblyansky) April 15, 2021

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So I certainly think it's best for the 28% corporate tax rate to go through (and much more important than that number is the minimum corporate tax, as others have said), but it's not a tragedy if Manchin wins the point.

— Per Aspera Ad Yastra (@Yastreblyansky) April 15, 2021

If there's anything that seems incomprehensible the links (starting with Kelton's thread, which you obviously need to read) should help straighten it out, but I'll field questions in the comments as well as the usual explanations of why I'm wrong.