What you’re not hearing about raising the corporate tax rate

Budget hawks in both parties want to raise the corporate tax rate. After being lowered from 35% to 21%, initially revenues from corporate taxes fell. But now they are virtually the same as the Congressional Budget Office in 2017 estimated they would be at the 35% rate. The lost revenues in the past are a sunk cost, but today, on a run-rate basis, the 21% rate is paying for itself. Moreover, payroll tax revenues are far higher than anticipated in 2017 -- without higher payroll tax rates -- because the corporate sector has expanded, increasing employment and wages that can be taxed. With higher earnings after-tax, the corporate sector can not only invest in more jobs but also in new technologies like AI. The budget-optimal and growth-optimal strategy is to leave well enough alone, or perhaps cut the corporate tax rate further.