Yesterday Biden unveiled his infrastructure plan, which is funded in part by an increase in the corporate tax rate from 21% to 28%.   Relative to the pre-TCJA 35% top marginal corporate tax rate, or even the current 37% top individual marginal tax rate, this may not seem like a bitter pill to swallow.  But consider a couple of facts that I was reminded of by Rohit Kumar (Co-leader of PwC’s Washington National Tax Services) during our February 10 CPE webcast, and Manal Corwin (Principal in Charge of KPMG’s Washington National Tax Office), during our March 26 UNC tax symposium:

• While the 2017 tax return did cut the corporate rate by a nominal 14 points, about 10 of these were paid for my corporate base broadening measures (e.g., NOL limits, new interest limits, one-time transition tax, R&D changes). While some of these were delayed or temporarily relaxed in 2020, the net reduction in the corporate tax rate ushered in my TCJA was less than 4 points.
• The average combined (e.g., federal and state) corporate tax rate for OECD member countries is about 23.9%, still lower than the current US corporate combined rate of about 26%.
• With a 28% federal corporate tax rate, the US will again have the highest combined corporate tax burden in the OECD. It held this spot for years prior to TCJA and many interpret as a strong deterrent to US investment.
• Given the dividend Congress, an increase to 28% is likely to be politically unachievable with 25% being the highest possible outcome.
• With a 25% corporate tax rate, the US will have the 2^nd highest (behind Portugal) combined corporate tax burden in the OECD.

Stepping back from this, it is also important to note that both before and after the TCJA corporate tax rate reduction, the corporate income tax accounted for less than 10 percent of federal revenue (2017 = 9%; 2019 = 6.6%).   So whether you think the corporate rate should be higher, much higher, or stay the same, one thing is indisputable:  If revenue is important, corporate tax changes are unlikely to be the place to find enough of it to matter.

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