Biden administration makes pitch for higher business taxes

The Biden administration is drilling down on the argument that higher corporate tax rates would ultimately help an ailing economy, saying the resulting infrastructure investments would boost growth.

Treasury Secretary Janet Yellen said Wednesday it was “self-defeating” for then-President Donald Trump to assume that cutting the corporate tax rate to 21% from 35% in 2017 would make the economy more competitive and unleash growth. Yellen said that competing on tax rates came at the expense of investing in workers.

“Tax reform is not a zero-sum game,” she told reporters on a call. “Win-win is an overused phrase, but we have a real win in front of us now.”

President Joe Biden last week proposed a $2.3 trillion infrastructure plan that would largely be funded by an increase in the corporate tax rate to 28% and an expanded global minimum tax set at 21%. Yellen said the plan would double-down on workers' skills and traditional infrastructure such as roads and bridges as well as modern infrastructure such as broadband. The increases would produce roughly $2.5 trillion in revenues over 15 years, enough to cover the eight years' worth of infrastructure investments being proposed.

Key to the Biden administration's pitch is bringing corporate tax revenues closer to their historic levels, rather than hiking them to new highs that could make U.S. businesses less competitive globally.

Trump's 2017 tax cuts halved corporate tax revenues to 1% of gross domestic product, which is a measure of the total income in the economy. Revenues had previously equaled 2% of GDP. That higher figure is still below the 3% average of peer nations in the Organization for Economic Co-operation and Development, the Treasury Department said in its summary of the plan.

Yellen also said the 2017 tax cuts failed to deliver on Trump's promise of...