Corporate tax increases are necessary for the U.S. to better compete globally, U.S. Commerce Secretary Gina Raimondo told Yahoo Finance Live in an interview. House Democrats are out with a proposal to raise the tax rate on companies with income of at least $5 million to 26.5%.
“If American business is going to compete, we need these investments,” Raimondo said. “And then the question is, how do you pay for them. I don’t know any business leader who thinks that it would be responsible of the president to operate this government as if he had a blank check.”
While the Democrat's proposal is lower than Biden's initial 28% plan, Raimondo said Biden is open to compromise on the tax rate.
Raimondo highlighted a number of areas where she says the U.S. needs to catch up.
“We need a better-trained workforce. We need workers who have digital skills. We need every American to have broadband and to be digitally literate," she said. "We need child care that is affordable.”
The United States does not rank highly compared with global peers in many of these areas. For example, U.S. child care and parental leave policies come in 40th place in a list of 41 developed nations ranked by Unicef earlier this year, beating out only Slovakia. Biden’s plan targets a cap on child care costs and universal pre-K.
Some representatives of corporate America say it’s not worth the tax hit to companies. “The tax hikes Congress is now considering are large and are targeted directly at investment. That will result in a big economic hit when it comes to the size of the economy, jobs, and wages,” recently wrote Curtis Dubay, senior economist at the U.S. Chamber of Commerce.
Raimondo acknowledges that tax increases aren’t popular: “People don’t love higher taxes. And we don’t expect that business would love higher taxes. However, when I talk to business leaders, they are very focused on competing on the global stage, and in order to do that, they say — and I agree, the president agrees — we need investments.”