Last week in Pittsburgh, Pa., President Biden presented the first phase of his plan to build a modern, sustainable transportation, communications, healthcare, housing, energy, and education infrastructure. To pay for the multi-trillion-dollar initiative, Biden proposed raising taxes on corporations to 28 percent — halfway between the rate established four years ago and what it was between World War II and 2017 — and increasing the global minimum tax on multinational corporations. He is also considering increasing income taxes on the wealthiest Americans, who also got a reduction in 2017.
If the past is prologue, Republicans in the U.S. House of Representatives and Senate will oppose any tax increases. Since the 1990s, the vast majority of them have signed a pledge drafted by Grover Norquist, founder of Americans for Tax Reform, opposing “any and all efforts to increase the marginal income tax rate for individuals and businesses.” In 2008, John McCain, the GOP candidate for president, blasted Barack Obama as a “socialist” committed to tax increases designed to redistribute wealth, instead of “helping us all make more of it.” In a televised debate, all the 2012 Republican presidential candidates indicated they would vote against a plan to reduce the federal deficit that included $10 in spending cuts for every $1 dollar in tax increases. “You’ve seen some of these [Democratic] socialist wackos,” President Trump declared a few years later, “they want to double and triple your taxes.”
Recent history teaches us that the Republicans’ absolutist approach to taxes is neither good policy nor good politics.
An examination of President Bill Clinton’s 1993 budget, which included an increase from 31 percent to 39.6 percent in the marginal rate for the wealthiest Americans, is instructive. Opposed by every Republican in the House and Senate, the legislation, said Chris Cox (R-Calif.), “is really the Dr. Kevorkian plan for our economy. It will kill jobs, kill businesses, and, yes, kill even the higher tax revenues that these suicidal tax increases hope to gain.”
Cox’s dire prediction did not come true.
Following passage of the bill, the United States enjoyed the longest sustained period of economic growth in its history: 23 million jobs were created. By 1998, despite a Congressional Budget Office prediction of a $360 billion deficit, annual growth in revenues had outpaced GDP by 2-3 percent, and the nation recorded its first federal budget surplus in 30 years.
In January 2013, to end a standoff with Congress, President Obama agreed to make President George W. Bush’s tax reductions permanent in exchange for restoring the 39.6 percent marginal rate for the wealthiest Americans. The vast majority of Republicans in the House voted against the compromise.
In 2014 and 2015, 5.8 million new jobs were created, the largest increase since the 1990s. And, it’s worth noting, the wealthiest 1 percent of Americans increased their share of the nation’s income at the same rate as before.
The American Society of Engineers give this country’s infrastructure a grade of C-. Identifying serious problems with roads, bridges, trains, tunnels, airport terminals, the electric grid, and water facilities, the report urged “elected leaders on both sides of the political aisle to … make good on promises they have made to improve our nation’s infrastructure.”
Polls indicate overwhelming support among Americans for action by the federal government, even when a $1 trillion price tag is mentioned in the question.
A substantial majority of Americans also support tax increases on corporations and the wealthiest Americans: 64 percent strongly or somewhat agree that “the very rich should contribute an extra share of their total wealth each year to support public programs;” 88 percent of Democrats, 70 percent of independents and 45 percent of Republicans advocate raising taxes on those making $400,000 or more each year; 59 percent (45 percent of Republicans) would apply a 70 percent top marginal rate (which, in fact, was the requirement between 1965 and 1980) to individuals making $10 million or more.
According to 66 percent of Americans, corporations pay too little in taxes; 82 percent want to close corporate tax loopholes, limit deductions for the wealthy, and use the revenue “to reduce the budget deficit and make new investments;” 79 percent want U.S. corporations to be taxed as much on foreign profits as on those made domestically; 73 percent support raising taxes on businesses that move their operations overseas.
Members of Congress across the political spectrum “have common ground” on infrastructure, Sen. Shelley Moore Capito (R-W.Va.) said recently, “because it’s job creating and every state benefits.”
That said, it remains highly unlikely that Sen. Capito and her Republican colleagues will, at long last, heed the (characteristically sarcastic) admonition issued some years ago by former Sen. Alan Simpson (R-Wyo.): “No taxes, under any situations, even if your country goes to hell” — and back Biden’s bill to build back better.
Glenn C. Altschuler is the Thomas and Dorothy Litwin Professor of American Studies at Cornell University. He is the co-author (with Stuart Blumin) of “Rude Republic: Americans and Their Politics in the Nineteenth Century.”