ANALYSISApril 13, 2026
Should the corporate tax rate be increased?
The U.S. corporate tax rate currently stands at 21 percent, established by the Tax Cuts and Jobs Act (TCJA) in 2018 and left unchanged by the 'One Big Beautiful Bill' signed into law on July 4, 2025. The Biden administration had proposed raising the rate to 28 percent, while the Trump administration has favored further reductions to as low as 15 percent. The debate over whether to raise, lower, or maintain the corporate rate remains active amid growing federal deficit pressures and the ongoing tariff debate.
When corporations pay less, do workers and shareholders actually win — or does the government just lose revenue that could fund schools, roads, and healthcare? The fight over the corporate tax rate is really a fight over who America's economy is built to serve.
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Whether 35% rate history proves anything
C
We already ran the 35 percent experiment for 24 years, and corporations spent billions avoiding it — inversions, earnings stripping, offshore cash hoarding. The CBO projects the post-TCJA corporate tax base will average 9.6 percent of GDP from 2025 to 2034, a 35 percent increase over the pre-TCJA average. A lower rate on a broader base can outperform a higher rate on a hollowed-out one.
L
Nobody is proposing to return to 35 percent — the proposal is 28 percent, in a post-OECD-minimum-tax world where the race-to-the-bottom dynamic that animated 2017 has fundamentally shifted. Treating those as the same policy ignores the single biggest structural change in international corporate taxation in a generation.
C
The OECD minimum floor doesn't eliminate base erosion — it sets a floor on some income, not on domestic avoidance, inversions, or the lobbying that will immediately begin stripping whatever base-broadening survives conference. The history you're dismissing is a warning about the mechanism, not just the rate.
L
If the mechanism is the problem, the answer is stronger anti-avoidance rules — which the Inflation Reduction Act's book-minimum tax began addressing. Keeping the rate at 21 percent doesn't fix the mechanism; it just locks in the revenue loss.
Whether TCJA actually benefited workers
C
The JCT and Federal Reserve Board finding that workers below the 90th percentile saw no wage gains from the TCJA cut is troubling — I won't pretend otherwise. But it cuts both ways: if rate cuts didn't generate broad wage gains, rate increases won't either. The distributional argument for raising the rate is weaker than its proponents admit.
L
That's a symmetry argument, and the evidence doesn't support it symmetrically. Workers saw no gains when the rate went down — which means the incidence channel conservatives used to justify the cut never operated in the direction that was supposed to benefit labor. You can't claim the channel is real in one direction but absent in the other.
C
The incidence channel operates through investment decisions made over years, not quarters — the measurement window for TCJA wage effects is genuinely too short to be conclusive, and you're citing that same window as settled evidence.
L
Seven years is not a short window for a wage effect, and the multi-university study — including Treasury economists — accounted for the investment response and still found dollar-for-dollar revenue losses. At some point 'the evidence isn't in yet' becomes a permanent deferral.
OECD minimum tax and competitiveness claims
C
The race-to-the-bottom argument has genuinely weakened with the OECD global minimum tax framework — I'll concede that directly. But the U.S. combined federal-state rate at 25.6 percent already sits above the simple OECD average, and moving the federal rate to 28 percent pushes that combined figure well above most peers operating under the new floor.
L
The floor is rising, not falling — that's the structural shift you're acknowledging. And the OECD framework means countries that previously competed on rate are now constrained. Citing the combined rate against a simple OECD average also obscures that state taxes vary enormously and that many peer nations have equivalent sub-national layers baked into their figures.
C
Even granting the OECD comparison is imperfect, the direction matters: we'd be raising our rate into an environment where competitors are clustered near the floor, not scrambling to cut further. That's a real constraint on how much headroom a 28 percent rate actually buys.
L
The headroom question is precisely why the revenue estimate matters — $1.3 trillion over a decade is not marginal money, and the competitiveness risk you're describing is speculative while the deficit is compounding in real time.
Multi-university study's challenge to rate-cut logic
C
The multi-university finding — Harvard, Princeton, Chicago, Treasury economists — is methodologically serious, and we accept its core result: the TCJA cut did not pay for itself in the measured window. But the fiscal case for keeping the rate from rising doesn't require self-financing; it requires that a broader, less-gamed base at 21 percent outperforms a narrower, more-avoided base at 28 percent over time.
L
You're conceding the cut didn't pay for itself, then arguing we should keep the rate low because the base might be broader now — but that broader base is exactly what generates the $1.3 trillion that a 28 percent rate would recover. You can't use the base-broadening effect as a reason to keep rates low and simultaneously as a reason not to apply a higher rate to it.
C
The base is broader partly because 21 percent made avoidance less worthwhile. Raise the rate and you change that calculus — the base projection is not rate-independent, and treating it as a static asset available for higher-rate extraction is the same mistake that produced the pre-2017 Swiss-cheese structure.
L
That argument proves too much — taken seriously, it means no rate above 21 percent is ever defensible, because any increase might trigger avoidance. At some point you need to either accept that anti-avoidance rules do the work, or admit the real objection is to the spending the revenue would fund.
Revenue use and distributional case integrity
C
The deeper concern is that raising the corporate rate to 28 percent funds an expanded spending baseline that becomes permanent, using one-time revenue headroom as a political mechanism. We've seen this cycle before — the base gets hollowed out, the spending remains, and the fiscal position is worse than before.
L
The 'one-time revenue headroom' framing doesn't hold when the alternative is deficit financing — the choice isn't between a rate increase and fiscal discipline, it's between revenue and borrowing. And the 'One Big Beautiful Bill' extended TCJA provisions without a single credible offset, which is the actual mechanism expanding the spending baseline right now.
C
Deficit financing is a real problem — but the answer to undisciplined spending is not to hand Congress a new revenue stream with no structural constraint on how it's used. Revenue relieves the pressure that might otherwise force spending discipline.
L
There's no evidence fiscal pressure produces spending discipline — it produces debt ceiling crises and continuing resolutions. The honest question is whether $1.3 trillion directed toward infrastructure, healthcare, and childcare reaches workers more reliably than a rate cut that the evidence shows reached them not at all.
Conservative's hardest question
The multi-university finding of near-dollar-for-dollar revenue losses from the TCJA cut is genuinely difficult to dismiss — it was produced by serious economists including Treasury researchers, and it directly undermines the self-financing argument conservatives often make for rate reductions. If the cut did not pay for itself, the fiscal case for keeping the rate low rather than raising it to fund genuine needs becomes harder to sustain on purely economic grounds rather than ideological ones.
Liberal's hardest question
The corporate tax incidence debate remains genuinely unresolved — if a significant share of the burden falls on workers through reduced wages rather than on shareholders, raising the rate could harm the very workers the policy is meant to help. This is not a frivolous concern, and the honest answer is that the distributional case for a rate increase depends partly on what governments do with the revenue, not solely on the rate change itself.
Both sides agree: Both sides accept the multi-university finding that the TCJA corporate rate cut produced essentially dollar-for-dollar revenue losses and did not pay for itself — the conservative rebuttal explicitly concedes this.
The real conflict: A factual and predictive conflict over base behavior: conservatives argue a lower rate on a broader, less-avoided base outperforms a higher rate on a gamed one over time, while liberals argue the current 28-percent proposal would operate in a materially different avoidance environment than the pre-TCJA era — these are competing empirical predictions about future corporate behavior that neither side has fully resolved.
What nobody has answered: If the incidence of corporate taxes genuinely falls on workers in both directions — meaning rate cuts do not raise their wages and rate increases do suppress them — then neither side's distributional argument survives intact, and the entire debate collapses into a question about government spending priorities that neither position wants to argue on its own terms: so what would it actually take to settle the incidence question, and why hasn't either side demanded that evidence be produced before legislating?
Sources
- Web search: Current U.S. corporate tax rate and TCJA provisions 2025
- Web search: One Big Beautiful Bill signed July 4 2025 corporate tax provisions
- Web search: Treasury Department estimate raising corporate tax rate to 28 percent revenue
- Web search: JCT cost estimate TCJA corporate rate cut 2018-2027
- Web search: Harvard Princeton University of Chicago Treasury study TCJA corporate tax revenue
- Web search: JCT Federal Reserve Board study TCJA corporate rate cut worker wages
- Web search: U.S. corporate tax rate OECD comparison 2024-2025
- Web search: Tax Foundation corporate tax wages study state local
- Web search: Global minimum tax OECD corporate tax competitiveness
- Web search: Biden administration 28 percent corporate tax proposal
- Web search: Trump corporate tax rate 2024 campaign proposal
- Web search: House Republicans corporate tax rate 25 percent compromise