Democrats Should Use Tax Code To Promote Positive Change
Several news outlets have reported that House Democrats are Planning to increase the corporate tax rate to 26.5%, against the current 21%, thanks to the reconciliation process. The revenue generated from this increase will fund essential programs that benefit American families, such as the expansion of the child tax credit and the inclusion of hearing and dental coverage in Medicare. However, while lawmakers typically focus on using the tax code to generate revenue for social programs, Congress should also consider making strategic changes to our tax code to get businesses to do good. social and supporting industries that provide employment opportunities to disenfranchised communities.
For individual tax filers, there are a multitude of tax provisions that support the common good and personal development. For example, we can amortize our charitable contributions, by encouraging other donations. We can also write off the interest on our mortgages, thus encouraging the purchase of a home, which strengthens communities. The ability to deduct student loan interest, in addition to the Lifetime Learning Credit, makes it easier for students to afford the costs of going to and staying in school. And an educated population benefits our country as a whole.
For businesses, however, most tax credits focus on the cost of the activity itself. Businesses can deduct office supplies and furniture, travel expenses, and rent. It’s understandable that our tax code prioritizes these deductions because they are effective in helping businesses get started and can make or break small businesses in particular.
But as Congress seeks to revise the tax code, members should also seize this opportunity to spur corporate behavior to do good through strategic tax incentives, including supporting companies that provide employment opportunities for Americans. of the working class and under-represented.
Democrats have prioritized policies that respond to climate crises. But given the scale of the problem, it is essential that the public and private sectors work together towards this common goal. Therefore, as Democrats strive to update the tax code, they should include sustainability credits in the reconciliation package, which would effectively encourage investment in the creation and design of sustainable products. For too long it has paid off to pollute the environment. With sustainability credits, we can start to reverse this incentive and instead encourage the creation of energy and green products. This is just one example of the type of tax credit that could be put to good use.
Additionally, as the economy continues to recover from the pandemic-induced recession, Congress must support industries that are vital to our recovery, especially communities that have been negatively impacted by the pandemic in addition to coping. systemic and structural inequalities.
The retail sector, for example, employs segments of the country hardest hit by COVID-19. About 56% of retail workers are women, and a higher percentage of retail workers are black or Latino. Given this, it is disappointing that the retail industry enjoys far fewer tax deductions than other businesses, on top of having to pay inordinate tariff debt. These businesses were also deemed “non-essential” during the pandemic, so many had to close their doors and lose countless dollars in revenue. Democrats should support additional tax credits for sectors of the economy such as retail that create jobs for under-represented populations.
The reconciliation package will result in a massive expansion of our social safety net. Hopefully, Democrats will also take this rare opportunity to combine a corporate tax rate hike with strategic changes to our tax code that promote corporate behavior for the good of society, such as support for start-ups. jobs for disenfranchised communities and strong environmental actions.