And one only has to look to the retail sector to see why. Before the Tax Cuts and Jobs Act became law, the retail industry had one of the highest effective tax rates of any sector of the economy, having fewer deductions and tax preferences to decrease their tax liabilities. This is in addition to the retail sector being disproportionately negatively impacted by tariffs. Despite still paying some of the highest corporate tax rates of any sector in the U.S., retailers — particularly small businesses that run on slim margins — were grateful when the tax bill reduced the rate from 35%, which was the highest in the industrialized world, to 21%.
Immediately after the new tax bill became law, retail companies detailed how they had reinvested those savings into workforce development and increased wages for workers. And given that one in four American workers are employed by the retail industry, any benefit to the sector is of benefit to American families across the country.
As the Biden administration and congressional Democrats inevitably turn their attention to the 2022 midterms, including the battleground Senate race happening here in Wisconsin, it is critical that Democrats focus on kitchen-table issues like how they are going to create jobs in the state and help Wisconsinites succeed.
One way they can do that, instead of raising taxes on businesses, is working to ensure that all businesses are paying their fair share now. If a business is finding a dubious way to skirt their tax liabilities, increasing the tax rate won’t actually result in the corresponding revenue increase. By implementing initiatives like the global minimum tax, instead of raising the corporate tax, Democrats can ensure businesses who are paying the appropriate amount of taxes don’t become overextended and have to lay off workers, and businesses who are evading taxation can be brought to justice, and the funds from owed tax revenue can be used for the public good.