President Joe Biden's large corporate tax hikes will cause companies to flee the United States "like a stampede," Kevin Hassett, the Council of Economic Advisers under former President Donald Trump, said Wednesday.
"It is the biggest tax hike, corporate tax hike in history," Hassett told Fox Business's "Mornings with Maria," noting that when Trump came into office, the nation was at that point under the highest corporate tax in the world.
"Wages hadn't grown for about a decade because everybody was locating their plants overseas," Hassett said. "We cut the rate to 21%. But the corporate side of the bill only cost about $300 billion because, at the same time, we did all this base-broadening to make it so that you can cut the rate without losing a lot of revenue."
Biden plans to fund his $2.3 trillion infrastructure plan by increasing the corporate tax rate to 28%, but it's "way worse" than simply going "halfway back to where we were," because the spending base is becoming broader, said Hassett.
"They're raising maybe about $2 trillion over 10 years, which, if you think about it, means that the Biden tax plan is to take the corporate tax code and make it much, much bigger and more onerous than it was when President (Barack) Obama left office," said Hassett. "It's like a $1.7 trillion tax hike relative to the Obama tax code. It's just unthinkable that that's going to happen."
But rather than leaving physically, companies will "basically just merge with a foreign company and then declare that their headquarters are where that company is domiciled, and if they do that, then they're basically going to be taxed like the people from that country," Hassett said.
And under Biden's planned tax hikes, most other countries will have a lower corporate tax rate, he added.
"There aren't going to be any jobs left in the U.S.," said Hassett. "We're going to have another decade of no wage growth, just like we had with Obama. But it's going to be worse because it's a big tax hike relative to what Obama left us."
However, earlier this week, Treasury Secretary Janet Yellen said she's working with G20 countries to agree on a global minimum tax rate in hopes of ending a "30-year race to the bottom on corporate tax rates."
Without the global minimum tax, the United States could find itself at a disadvantage once again with Biden's call to increase the U.S. corporate tax rate, said Yellen, speaking to the Chicago Council on Global Affairs.
It's important to "end the pressures of tax competition" and to ensure governments have "stable tax systems that raise sufficient revenues in essential public goods and respond to crises, and that all citizens fairly share the burden of financing the government," Yellen commented.
In addition, a U.S. Treasury official said separately that it's important to have the world's major economies in agreement on a global minimum tax price, and that the United States plans to use its own tax legislation to keep companies from shifting either residency or profits to countries as a tax haven, and other major economies will do the same thing.
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