Biden Tax Plan

Floor Speech

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Mr. GRASSLEY. Madam President, last week, former Vice President Biden released his Presidential tax plan. I wish he would release the list of people he is going to put on the Supreme Court, like he said he was going to do in June. He hasn't done that, and, I think, yesterday, he said he wasn't going to do it, but we do have his high-tax plan.

He has vowed to raise taxes immediately on U.S. businesses even though our country is recovering from the worst economic crisis since the Great Depression. Usually, when you are in that economic condition, you don't raise taxes, and the very last thing struggling Americans need, and particularly the businesses that create the jobs, is a massive tax increase at this time. Of course, Mr. Biden's tax plan shouldn't come as a surprise to anyone. His party seems to think the answer to every problem in America is to raise taxes and spend more money.

When he was Vice President, the U.S. corporate tax rate was the highest in the industrialized world. It isn't now because of President Trump's tax proposals and the tax reform legislation we passed December 2017. Prior to tax reform, U.S. companies were not competitive with their foreign counterparts. And there were constant headlines about companies that were moving their headquarters overseas, largely because of our outdated tax system.

In fact, a number of Mr. Biden's proposals make me think that he is reliving his time as Vice President. His plan to increase the corporate tax rate from 21 to 28 would very quickly take us back to those days. Once again, this country would be saddled with the highest business tax rates in the industrialized world, taking into account Federal and State taxes in this country. U.S. companies, both large and small, would see higher taxes than their foreign competitors in France, Germany, the UK, and other major trading partners. In some cases, those taxes would be as much as 15 percentage points higher.

Mr. Biden says our tax system encourages offshoring, profit shifting, and inversions. Back when he was Vice President, those things actually happened: offshoring, profit shifting, and inversions.

When Mr. Biden was Vice President, the U.S. tax law allowed companies to defer their foreign earnings until they were brought back to the United States. Why would you bring them back when we had the highest tax rate in the industrialized world?

That system allowed many companies to delay paying taxes on their foreign earnings, and in some cases, that could be indefinitely.

As part of tax reform, we specifically sought to end the parking of profits overseas. We wanted that money to come home so that money would be invested in this country and would create jobs.

That is why we enacted the tax on global intangible low-tax income-- or GILTI, as it is referred to--which imposes a minimum tax on foreign earnings in low-tax countries.

And when Biden was Vice President, there were plenty of opportunities for what we call base erosion. That is why we created the base erosion anti-abuse tax--or the BEAT, as it is called--which targets deductible payments made to foreign affiliates. We also imposed limits on the deductibility of interest.

Together, these policies addressed loopholes so companies can't erode the U.S. tax base and avoid taxes.

While tax reform cracked down on notable abuses, it also had the positive effect of making the United States a far more attractive place to invest--not only for profits of U.S. companies coming home but for foreign investment in America as well.

We created the foreign-derived intangible income rules to incentivize companies to keep intellectual property in this country, not abroad.

We also allowed immediate expensing of investments to encourage companies to put their facilities and jobs here on U.S. soil. And President Trump has gone way beyond the new tax law to provide incentives to get industry back to this country.

Now, Mr. Biden may be harkening back to 2014, but let's all remember that companies then were announcing left and right their plans to invert or move their headquarters overseas, but since our 2017 Trump tax reform, I haven't heard of any companies with inversion plans. Quite the opposite, companies have called off inversions and even brought back operations to this country, and they are citing our tax reform as the main reason for doing it. So why would Mr. Biden want to undo that?

Even more curious is that Mr. Biden's own talking points suggest that he supports a number of our tax reform policies in that 2017 bill.

Kimberly Clausing, who reportedly advises Mr. Biden on tax policy, has said the Tax Cuts and Jobs Act ``should be commended for providing some limits on tax avoidance through the GILTI and the BEAT.''

What is more, Ms. Clausing has estimated the new rules under the 2017 tax bill will result in a 20-percent decrease in shifting profits overseas.

That is consistent with the Joint Committee on Taxation's macroeconomic estimate in 2017 that found that tax reform would reduce profit shifting and increase the U.S. tax base.

Nevertheless, Mr. Biden wants to double down on increasing taxes on U.S. businesses and, in fact, undo the progress that we have seen since tax reform in 2017.

In addition to higher taxes on domestic earnings, he also wants to increase the rate on U.S. companies' foreign earnings to 21 percent. That is almost double the 12.5-percent rate that the OECD is targeting for its global minimum tax.

I guess the former Vice President wants to ensure that no country can top the United States when it comes to the highest tax rates possible.

And that is not all. Mr. Biden proposes an additional 10-percent penalty on goods and services imported by U.S. companies from foreign affiliates.

Now, even the Washington Post editorial board noted earlier this month that Vice President Biden's policy simply ignores the reality of global supply chains.

Do we, in fact, really want to encourage foreign countries to tax goods and services imported from the United States? That could be a slippery slope.

The truth is, Mr. Biden is trying to fix problems from the last administration. Republicans already met that challenge, and tax reform of 2017 is working.

Data from the Bureau of Economic Analysis clearly shows that tax reform stemmed the flood of offshoring, while encouraging U.S. companies to invest right here in the United States.

In fact, among U.S. multinationals, employment investment, research, and production in the United States has increased at a faster rate in 2018 than the average rate over the past 20 years--faster than the growth rate of U.S. multinational companies that are abroad.

Of course, there is more work to be done. But tax reform has made this country a more attractive place for businesses to headquarter, invest, and create jobs.

Now, if the former Vice President succeeds in his plans, it will not just be our businesses that will bear the brunt.

The Joint Committee on Taxation and Congressional Budget Office have both concluded that 25 percent of the corporate tax is borne by workers. So workers will be hurt. They will feel the burden of the Biden plan thorough fewer jobs, through reduced wages, and through less benefits.

Above all, the Biden tax plan ignores the reality of today. We are trying to see our way out of the global pandemic. Undoing the progress that we have made through tax reform, especially now, is certainly not a prescription for economic recovery and growth.

What is more, the Vice President's plan will do nothing to speed the progress that we made reducing unemployment since the height of the pandemic. Instead, it will do just the opposite, work against it.

The Biden tax increases wouldn't be good policy in the best of conditions, but they are certainly bad policy right now because of the economic hardship caused by the pandemic.

If Mr. Biden really wants to keep living in the Obama era, he should recall President Obama's sound advice on tax policy during a crisis, the financial crisis of 2009 and 2010, when President Obama said this: ``The last thing you want to do is raise taxes in the middle of a recession.''

That is something we should all be able to agree upon.

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