The November faceoff between President Joe Biden and former President Donald Trump presents big business with a big choice to make over the coming months: support an incumbent who will bring stability but potentially reduced profits or back a loose cannon who might threaten democracy but not its bottom line.
One number best sums up the reason major corporations are flirting with the idea of a second Trump term: 21%. That’s the current corporate income tax rate, a number that Trump and congressional Republicans brought down from 35% as part of their 2017 tax cuts. Unlike most of the bill, whose changes are due to sunset next year, the corporate rate cut is permanent — and a major drain on the country’s finances.
One number best sums up the reason major corporations are flirting with the idea of a second Trump term: 21%.
“At a cost of $1.3 trillion over 10 years the deep cut in the corporate tax rate was the most expensive provision of the 2017 tax law, largely benefiting the most well-off,” Samantha Jacoby, senior tax legal analyst for the Center on Budget and Policy Priorities, told the Senate Budget Committee last year. She added that the Tax Policy Center estimates that “over a third of the benefits from corporate rate cuts flows to the top 1% of households.”
Trump has made it clear that he intends to keep that money flowing into the pockets of the ultra-wealthy. He told the CEOs who gathered at the Business Roundtable last week that he would like to see the corporate tax rate slashed even further, to 20%, in part because it’s a “round number,” The New York Times reported. Unsurprisingly, those comments were the most well-received among the C-suite types in the audience, according to attendees who spoke with the Times.
Biden, on the other hand, has called for raising the corporate tax rate to 28%, which has had executives grumbling for years. While he has been unable to make that happen, his administration has been busy clawing back revenue that the rich have successfully hidden. The IRS on Monday likewise announced a new set of rules that could bring in $50 billion over the next decade by closing loopholes that let businesses move money around in ways that have no economic purpose other than to lower their tax bills.
It’s worth noting that even if Biden were to hit that rate, it would still be far below the historic peaks during the post-World War II economic boom, when it hit over 50%. It’s also not higher than the top rates in the Group of Seven, which are 29.94% in Germany and 29.74% in Japan. Even with the 15% minimum corporate tax that Democrats managed to pass in 2022, profits have remained sky-high for leading companies.
While the thrust of the debate is clear, with Democrats hoping to raise the corporate tax rate and Republicans seeking to slash it further, neither party is in complete lockstep over the details. Some Democrats, like House Ways and Means Committee ranking member Richard Neal of Massachusetts, are aiming to enact a 26.5% rate, a midway point between the pre-Trump era and the status quo. Some Republicans are, meanwhile, mulling over whether to cut rates all the way down to 15%, according to The Wall Street Journal, dropping them to a level not seen since the Great Depression.
As the Journal noted, that makes for a massive disparity between the two sides’ policies: “Each percentage point is worth more than $130 billion over a decade in tax revenue, creating a $1 trillion-plus gap between the poles of the parties’ positions and giving the largest U.S. companies an outsize interest in the election’s outcome.”
That includes the business leaders who had pledged never to support Trump after Jan. 6, 2021, but have begun hedging their bets as the election has crept closer. Trump’s appearance before them Friday didn’t do much to give them confidence, according to reporting from the Times’ and CNBC’s Andrew Ross Sorkin. His sources in the room, some of whom were leaning toward Trump, said the former president was “remarkably meandering” and “couldn’t keep a straight thought,” as he told CNBC afterward. And yet there hasn’t been a rush from those in the room to air those concerns publicly.
Wall Street moguls and oil barons alike have shrugged and determined that there’s more to gain from forking over money than not.
Their silence speaks volumes about their support for Trump’s overall tax plans, which even in their most damaging iteration would only continue the flow of money toward the already wealthy, as my colleague Zeeshan Aleem covered Sunday. Their self-interest was summed up artfully in an April plea from North Dakota Gov. Doug Burgum, who is reportedly on Trump’s list of potential vice presidential running mates. “If you’re a billionaire and you care about your shareholders, you care about your family, you care about your grandkids, you should be voting for someone that’s going to bring prosperity to America and peace to the world,” Burgum stated in a Fox News interview.
Trump has likewise been anything but quiet about his desire to see the managerial class stand alongside him, issuing calls for its members to open their wallets in exchange for wild promises that border on solicitations for bribery. Wall Street moguls and oil barons alike have shrugged and determined that there’s more to gain from forking over money than not. After all, Republican business types have told sympathetic listeners that “the threat to capitalism from the Democrats is more concerning than the threat to democracy from Trump,” Politico recently reported.
It’s important to be clear that capitalists have been doing just fine under Biden so far and would continue to be just fine in a second term. Even another complete Democratic sweep of Congress and the White House wouldn’t change that. So if big business types do opt to cast their lot fully in with Trump, it would be a safe bet for them. They’re set to continue to amass wealth either way — it’s the rest of us who would have to live with the consequences as a second Trump administration brings all of his darkest promises to life.
