The Eastern Plains of Colorado have long been home to those who adapt and meet challenges head-on. From the early days of Native Americans to the Dust Bowl, residents of the eastern part of the state have always come out on top when facing seemingly insurmountable obstacles.
This perseverance lives on today in the Eastern Plains. Despite the challenges the Plains faces during the pandemic, eastern Colorado’s farmers, shop owners, schools, and communities have admirably weathered the storm over the past couple of years. But now, a new challenge from Washington arises that could threaten the region’s recovery and future: higher taxes.
As part of a plan to pay for provisions in President Biden’s Build Back Better package, some lawmakers are aiming to raise taxes like the corporate tax, as well as a lesser-known tax called the Global Intangible Low Tax Income (GILTI) rate. While the proponents of this legislative push might think these tax hikes will only impact large corporations who can afford to pay them, that is not the entire story. These increases will significantly raise the tax burdens of businesses small and large alike, with laborers and consumers feeling the worst of the effects.
Pro 15 serves as a voice and advocate for the 15 counties that make up the Eastern Plains. Our organization is concerned that these tax increases will do more harm than good to our communities and come at a time when we need to support and bolster our economy, rather than make wide-sweeping changes that could set our economy back to peak-pandemic levels.
Research from nonpartisan groups such as the Tax Foundation and the Tax Policy Center has found that corporate taxes are mostly passed onto laborers, with workers typically bearing anywhere between 50% and 100%. Given that Colorado’s workers are contending with rising costs of living, stagnating wages, and supply chain shortages related to the pandemic, adding additional financial burdens at a time like now seems cruel.
There is also evidence that raising the corporate tax rate has detrimental effects on our nation’s economy over the long-term. Further research by the Tax Foundation shows how the implications of a higher corporate income tax rate compound over time, resulting in an estimated $720 billion reduction in gross domestic product (GDP) over the next decade. This hit to our economy would be felt by families, businesses, and communities of all sizes – nowhere would be left untouched.
The prospect of a higher GILTI rate also brings its own set of problems that could have consequences for the Eastern Plains region. GILTI is a fee placed upon the foreign earnings of American companies and is the only such fee currently enacted in the world – nowhere else do countries tax profits made abroad by domestic companies. As such, American businesses are already operating at a competitive disadvantage compared to foreign peers due to the constraints of GILTI. Raising it only compounds the financial barriers they face.
Research from the National Association of Manufacturers found that a GILTI increase could result in nearly one million jobs and $20 billion in economic activity lost. Additional research shows that increasing GILTI could result in up to a 10.9% decrease in domestic employment.
Considering that many farmers and businesses in the Eastern Plains import and export products, as well as utilize foreign suppliers, a GILTI increase would spell trouble for them – it is not just large multinationals that are affected.
As omicron surges across Colorado and the rest of the country, it is important that our lawmakers make smart policy decisions that take us forward, rather than move us back. Increasing the corporate tax rate and GILTI does not achieve that, but rather puts more barriers on our road to recovery.
This article was originally posted on Increasing taxes only increases our problems