COVID-19 devastated businesses across Colorado, and not just financially. Many closed their doors and sent workers home to prevent the spread of the coronavirus. It has been a traumatic time characterized by struggle, grief, and loss.
I have seen the effects of the pandemic on Colorado’s businesses up close and heard countless stories of people struggling with the economic fallout of COVID-19.
Our organization, the Colorado Business Roundtable, understands just how long it may take for some businesses to bounce back, which is why we’ve helped lead the charge in series of forums over the last year called “The Road to Recovery”, highlighting key policies that will allow our business communities to come out of the pandemic stronger than before.
And there is a strong case for optimism.
In Colorado, more than 50% of our eligible population is vaccinated. Stores are reopening, families are reconvening in person, and communities are connecting once again. It’s an exciting time in our state, but we are just entering the beginning phases of our economic recovery.
After a year when nearly 400,000 small businesses closed in America, our policymakers must find ways to stimulate economic activity and support Colorado’s businesses in local communities across our state — it’s needed now more than ever.
Nonetheless, recovery efforts may be in vain due to provisions in President Joe Biden’s tax plan that would raise the corporate tax from 21% to 28%, as well as raise the Global Intangible Low Income Tax (GILTI) rate from 10.5% to 21%, to help fund infrastructure development.
This would increase tax payments for businesses of all sizes across Colorado and elsewhere in America. At a time when businesses need support, this plan will only increase financial burdens upon Colorado’s workers and enterprises as they work towards the road to recovery.
Businesses across the United States currently pay a combined corporate tax rate of 25% when including state and local taxes, one of the highest rates globally. If this figure is increased further, as proposed by the White House, then Colorado’s businesses would struggle to maintain operations and meet bottom lines — they would effectively be paying the highest corporate tax rate in the industrialized world, limiting our global competitiveness.
Proponents of these tax increases believe that they would only impact large corporations. They could not be more wrong. These corporate tax increases will also raise costs for Colorado’s workers and families by passing the tax burden along to consumers, slowing our economic recovery, and driving up inflation at an alarming rate.
According to the nonpartisan Congressional Budget Office, laborers bear between 75% and 100% of corporate tax increases because of the resulting higher costs of goods and services.
When the U.S. last had a higher corporate tax rate — before the 2017 Tax Cuts and Jobs Act lowered it to 21% — American businesses experienced several years of economic decline, including decreased levels of investment, productivity, and wage growth, as well as a multitude of profit shifting and avoidance schemes throughout the corporate sector.
Seeing as how the current corporate rate has “increased incentives to work, save, and invest,” according to the nonpartisan Tax Policy Center, our lawmakers should be looking to reinforce and expand upon current tax laws and rates, not throw the whole book away.
Increasing corporate taxes now is a recipe for disaster. Colorado’s businesses need a boost, not more barriers.
Debbie Brown is the president of the Colorado Business Roundtable.
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