A Deal the Tech Industry Can Embrace: Pay More Taxes, Get Better Infrastructure
For years Silicon Valley leaders have urged a bigger federal government investment in infrastructure — from clean energy to better roads to broadband. Now President Biden has proposed to pay for this investment by increasing the corporate tax rate. That’s a deal that the tech industry can support.
Recent headlines have highlighted business community opposition to Biden’s corporate tax hike. But business isn’t monolithic in its views. Tech industry leaders like Amazon’s Jeff Bezos and Lyft’s John Zimmer have registered their support for a corporate tax rate hike.
While no company leader would eagerly increase their company’s tax bill, there’s a growing recognition in the tech industry that the United States needs sizable investments in both tangible and human infrastructure. As Treasury Secretary Janet Yellen recently wrote, “by choosing to compete on taxes, we’ve neglected to compete on the skill of our workers and the strength of our infrastructure. It’s a self-defeating competition.”
Better infrastructure makes it easier to do business in the U.S., and investments in people will help more Americans fill the jobs of the future. That’s why our organization, Chamber of Progress, supports a corporate tax rate increase to help fund big investments in infrastructure.
While the American Jobs Plan includes a lot of traditional infrastructure like highways and bridges, it also includes a lot of investments to help and train workers; help disadvantaged communities; invest in American growth and manufacturing; and address the climate crisis. These investments include:
- Clean Energy: Billions of dollars to develop hydrogen, advanced nuclear, carbon capture, energy storage, and floating offshore wind; $174 billion to build electric vehicles charging infrastructure and supply chains; a requirement that federal agencies to purchase 24x7 clean electricity; a national Energy Efficiency and Clean Electricity Standard to accelerate the use of 100% carbon pollution-free power.
- Disadvantaged communities: $100 billion to reach 100% coverage of high-speed, affordable broadband; $20 billion to reconnect neighborhoods cut off by legacy highway projects; and $25 billion for clean energy research at HBCUs.
- Training and schooling: Funding to create one to two million new registered apprenticeships for non-college graduates; $100 billion to upgrade and build new public schools, helping close the opportunity gap; and $25 billion to help upgrade child care facilities to support working families.
- Manufacturing and Growth: More than $200 billion to revitalize and retool American manufacturing; $50 billion in new funding for the National Science Foundation as part of the Biden-Harris “technology directorate” will direct critical research money into biotech, semiconductors, and advanced computing; $31 billion in new growth and entrepreneurial capital.
Tech industry leaders have clamored for years for these kinds of big investments in training, manufacturing, and clean energy — and this is the most meaningful opportunity Congress will have this year to take bold action against climate change.
Tech Industry Leaders Are Happy to Pay Their Fair Share
It’s worth putting President Biden’s proposed corporate tax increase in historical context. Over the past three years, corporate tax collections have fallen to their lowest level since World War II: 1% of gross domestic product. Even a 7% corporate tax increase would keep the U.S. rate below where it was for decades.
Many tech industry leaders view corporate taxes as a patriotic duty and a wise investment in a well-functioning society. And some analysts estimate these investments will add an extra 1.6% to GDP by 2024.
Big businesses traditionally assert that corporate tax hikes discourage investment, but a recent Wharton analysis found that a tax increase would have little impact on corporate investment.
And my experience working in the tech industry for nearly 15 years is that tech leaders’ decisions to invest in new facilities, products, or people were driven entirely by market conditions or long-term growth plans; tax rates were a nonfactor.
Tax Policy Should Incentivize Corporate Citizenship
As we raise the corporate tax rate, we need to make sure that tax policy continues to encourage the kind of job growth, expansion, and good citizenship that everyone wants to see from U.S. tech companies.
America’s leading tech companies operate globally, so it’s in America’s national interest to have a fair global tax system. For the past few years, European countries have singled out American tech companies for discriminatory “digital service taxes” on their European sales — despite the fact that the US levies no discriminatory tax on, say, German-made BMWs sold to American consumers.
The Biden Administration recently rebutted these tech-targeting proposals with a fairer proposal to tax all global sales by the world’s top multinational firms. The Administration is also lobbying for a global minimum tax rate to avoid a global race to the bottom. The tech industry is cheering Secretary Yellen’s leadership on this front.
U.S. companies also need to be able to compete fairly against foreign competitors, and that’s why Congress should focus on how to fairly tax U.S. companies’ foreign revenue. Our tax system should also continue encouraging companies to invest in research and development. And Congress should take a close look at how the current cap on state and local tax deductions might threaten the ability of tech companies to attract talent.
I respect the CEOs who worry about a corporate tax hike; the business community isn’t single-minded and tax proposals impact different companies in different ways.
But the need for bold national action is great, and many in the tech industry believe in paying their fair share. President Biden’s proposal to raise corporate tax rates to make major investments in infrastructure is a tradeoff that many in the tech industry can support.
The Chamber of Progress (progresschamber.org) is a new center-left tech industry policy coalition promoting technology’s progressive future. We work to ensure that all Americans benefit from technological leaps, and that the tech industry operates responsibly and fairly.
Our corporate partners do not have a vote, veto, or total agreement with our positions, and we remain true to our stated principles even when our partners disagree.