Florida is growing. The results of the 2020 Census show that our population increased by more than 14% over the last decade, keeping us among the top 10 growing states in the U.S. Competitive state tax policy helped achieve this, making Florida a much more attractive place to live, work and run a business.
But President Joe Biden and leaders in Congress are making a push for substantial tax increases across the board. Whether it’s higher taxes for small businesses owners who pay through their individual return, or an increase in corporate taxes, this plan will hurt Florida’s manufacturers, making it harder for them to sustain their operations, let alone grow their businesses and create jobs.
The 2017 tax reforms improved a lot of the things that were broken about our federal tax code, helping Americans keep more of their hard-earned money and bringing out the best in businesses through reductions in our corporate tax rates, which were substantially higher than those in most of the developed world. Tax reform brought the corporate rate down, helping to make U.S. businesses more globally competitive. That’s critical for Florida, where one out of every five jobs depend on foreign trade.
Businesses reinvested in Florida with the tax savings they found after 2017. In the two years after the tax reforms were enacted, before the pandemic hit, Florida added more than 400,000 jobs, experienced historically low unemployment and held a private-sector job growth rate that significantly out-performed the nation’s. In addition to creating new job opportunities, Florida businesses also gave back to their employees, with many announcing bonuses, wage increases and enhanced benefits. The tax savings were also used to make significant investments in infrastructure and even charitable donations.
So it doesn’t make sense that President Biden and congressional leaders would try to reverse course and raise taxes, particularly when we need every economic boost we can get to overcome the pandemic’s disruption.
New data shows that the tax policy changes now under consideration would be disastrous across the board. The National Association of Manufacturers released a new study that shows what would happen in the aftermath of tax increases such as a higher corporate tax, higher rates for small businesses and the phaseout of important deductions. According to the study, the U.S. would see a decline of one million jobs within two years, averaging losses of 600,000 jobs each year to follow. There would be long-term declines in wage growth, investment, and overall economic activity, amounting to a loss of $117 billion in GDP over the first two years.
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Jobs and investment are key ingredients for keeping Florida’s growth streak going strong. And we need to build on the gains we made during the 2017 tax reforms — not reverse gears. Only one country increased its corporate tax rate last year, and the rest of the world’s business taxes have been trending down, year after year. Even with the lower corporate rates we achieved in 2017, the U.S. is still only middling in terms of global tax rate competitiveness. Going back to where we were before 2017 could lead us to lose out on much-needed global investment.
Congress and the president ought to take a lesson or two from Florida’s sensible tax policy, focusing on helping people keep more of their earnings, making it easier for businesses to create jobs and raise wages and making the U.S. an even more attractive place to invest. Raising taxes isn’t a recipe for growth.
Tom Feeney is the president and CEO of the Associated Industries of Florida, formerly served as the Speaker of the Florida House and represented Florida’s 24th Congressional District.