Here’s a letter to the Washington Post:
David Lynch reports that Pres. Biden’s proposed global cartel of tax collectors – euphemistically described as a “global minimum tax on corporate profits” – “is designed to halt a cycle of corporate tax-cutting that has sapped government revenue around the globe” (“Biden set for G-7 boost in bid for all nations to impose minimum global corporate tax,” June 1).
The only evidence offered for any such ‘sapping’ in the U.S. is this sentence: “Annual revenue from corporate taxes relative to the size of the economy is now less than one-quarter as large as in 1967, according to the Congressional Budget Office.” (By the way, the link in this quoted sentence doesn’t go to a CBO study. It goes at another Washington Post report that itself not only doesn’t mention any CBO study; it doesn’t even touch on trends in corporate tax revenues.) And Our World In Data reveals that governments worldwide are not having their tax revenues “sapped.”
Yet while it might be true that corporate tax revenues in the U.S. relative to GDP have fallen since 1967, they have emphatically not been “sapped.” According to the St. Louis Fed, the U.S. government’s inflation-adjusted corporate tax revenues were in 2020 17% higher than in 1967. And in the pre-Covid year 2019 these tax revenues were 30% higher than in 1967.
As for all federal government inflation-adjusted tax receipts, these were 220 percent higher in 2020 than they were in 1967.*
Biden’s proposed taxing cartel is less about preventing a mythical ‘sapping’ of government revenue than it is about further unleashing what Amity Shlaes calls government’s “greedy hand.”
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
* The nominal figures here in the ninth column (“Total Receipts”) of Table 2.1 were adjusted for inflation using the GDP deflator.
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