Treasury Secretary Yellen has been out on the campaign trail, calling for higher taxes on individuals and US companies. The Secretary thinks the government needs to collect more taxes, even though her own Department just reported that federal tax collections are at record high levels.
According to the Treasury Department’s monthly budget report, total federal tax receipts in the first eleven months of fiscal 2022 totaled $4.4 trillion, an increase of $823 billion, or 23%, over the same period last year. Total federal taxes are on track to reach nearly $5 trillion, an incredible 45% increase in the last two years. Taxes as a percent of GDP will reach 19.6%, the second-highest level since World War II.
Treasury also reported that corporate tax receipts are projected to reach $404 billion, the highest level ever, and nearly twice as much as the amount collected in 2020. Corporate taxes as a percent of GDP are now 1.7%, equal to the modern average (2000-2016) and higher than the 40-year average (1980-2020).
Even with taxes soaring, the Treasury Secretary wants to increase the US corporate tax rate to the highest rate in the developed world. Under her plan, the combined average federal-state tax rate would be 32.8%, 40% higher than the average OECD rate of 23.4%, putting US companies at a significant competitive disadvantage against their leading competitors.
The new U.S. tax rate would also be much higher than China’s top rate of 25%.
Numerous studies have shown that raising the corporate tax rate would be harmful to economic growth, resulting in higher prices, lower wages, and fewer jobs.
Washington does not need more tax revenue to spend. Higher taxes are the last thing we need with inflation soaring and the economy slowing.