Biden’s Tax Policy Balances Higher Corporate Rates with New Loopholes

Understanding the Nuances of Biden’s Tax Policy

Amidst the ongoing debates about fiscal responsibility and economic strategy, President Joe Biden’s approach to the corporate tax landscape has been a subject of intense scrutiny. The administration’s strategy appears to be a balancing act, aiming to increase the corporate tax rate while simultaneously expanding tax loopholes and giveaways. This dual approach may seem counterintuitive at first glance, but it aligns with a broader vision of using the tax code as a tool for both government revenue and influence over corporate behavior.

Chris Edwards from the Cato Institute provides insight into the President’s record, highlighting that Biden has enacted legislation that introduces a myriad of complex tax loopholes, particularly favoring certain industries. These are not simplifications of the tax system but rather targeted breaks that cater to specific sectors. The Inflation Reduction Act, for instance, is cited as an example of this tactic, offering substantial subsidies to energy companies.

Edwards notes a significant increase in corporate tax expenditures under Biden’s tenure, with an annual average surge of 92 percent from $109 billion to $209 billion. This near doubling of corporate tax breaks stands in stark contrast to the administration’s public messaging on tax fairness and uniformity of rules.

The rationale behind this strategy becomes clearer when considering the value of deductions and exemptions against a backdrop of higher tax rates. The greater the corporate tax rate, the more valuable these loopholes become, thus granting politicians enhanced leverage over corporate decisions. It’s a system that has not only shaped economic policy but also benefited those within Biden’s political sphere through lobbying and consulting opportunities.

Biden’s history with tax loopholes extends beyond his presidency, with a career-long pattern of facilitating special-interest tax breaks. This approach has also been used to justify substantial fiscal support to other favored groups, as evidenced by Biden’s defense of student loan forgiveness by drawing parallels with corporate tax credits.

The intricate web of high tax rates coupled with abundant loopholes is characteristic of what some critics call ‘Bidenomics.’ It’s a framework that arguably distorts economic incentives, bolsters political influence and wealth, and perpetuates crony capitalism while serving the political objectives of the current administration.