Roy Blunt incompletely characterizes Joe Biden’s corporate tax rate proposal

The White House and congressional Republicans are squaring off over President Joe Biden’s infrastructure proposal, with both sides zeroing in on the corporate tax rate, a major source of funding for the new initiatives.

Biden is proposing to raise the federal tax rate on corporations from 21% to 28%. That’s below the 35% rate that was in place prior to the tax law signed by President Donald Trump in 2017. But Republicans say that an increase to 28% would leave the United States at a competitive disadvantage to other nations with lower corporate tax rates. (Sen. Joe Manchin of West Virginia, a moderate Democrat whose support will be needed to pass any such bill, has already said he opposes any increase beyond 25%.)

In an April 4 appearance on Fox News Sunday, Sen. Roy Blunt, R-Mo., reiterated the argument that the United States can’t afford to increase its corporate tax rate to 28%.

"If we went back to 28%, I think we'd be No. 2 in the world in corporate taxes," Blunt said.

Blunt has a point, but he left out some important wording.

To make the most complete country-to-country comparisons, experts generally look at a country’s national corporate tax rate plus a weighted average of tax rates for its sub-national units. (In the case of the U.S., that would be states that have corporate income tax rates.)

While the national rate under Biden’s plan would be 28%, experts have calculated that the national plus sub-national rate would average out to 32.34% under the proposal.

Every year, the Tax Foundation collects the corporate tax rates for essentially every nation and subdivision. By their calculations, Biden’s proposed combined corporate tax rate would rank 20th in the world. 

"Looking at the highest corporate tax rates all around the world, this is incorrect," said Elke Asen, a policy analyst with the Tax Foundation. Eric Toder, the co-director of the Urban Institute-Brookings Institution Tax Policy Center, agreed with this assessment.

Here’s a list of the top 25 corporate tax rates in the world if Biden’s proposal was enacted as is. (The Tax Foundation’s list includes some autonomous and quasi-autonomous regions that levy their own corporate tax rate, such as Puerto Rico and American Samoa, which are U.S. territories.)

But there’s an important caveat: Most of the countries with higher corporate tax rates than Biden’s proposal are relatively small economies. Of the larger economies, only Brazil would have a higher combined rate, and France and Portugal would be just slightly lower.

Katie Boyd, a spokesperson for Blunt, said that the senator was intending to compare the United States with the larger economies. Biden’s combined rate would be higher than every country in the two groups of advanced industrialized nations — the Organization for Economic Cooperation and Development and the Group of Seven.

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A look at all OECD members shows the Biden proposal would be higher than any other member’s combined rate, with Portugal coming closest.

Looking only at the national rate, the Biden proposal would be tied for seventh among the OECD’s 38 nations, behind Australia (30%), France (32%), Colombia (32%), Costa Rica (30%), Mexico (30%), and Portugal (30%), and tied with New Zealand (28%). That would rank in the top one-fifth of OECD nations.

Blunt said Biden’s proposal would put the U.S. "No. 2 in the world" for the highest corporate tax rate.

Strictly speaking, Blunt is incorrect: If Biden’s proposal is enacted as is, at least 19 countries would still have a higher corporate tax rate, when national and sub-national tax rates are combined. However, with the exception of Brazil, these are mostly small economies.

If you instead compare the United States to other advanced industrialized nations, Blunt has a point: The combined national and sub-national tax rate under Biden’s proposal would be higher than any other OECD country, and the 28% national tax rate alone would rank in the top one-fifth of OECD countries.

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