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Top Ten Congressional Districts Impacted by Biden Corporate Tax Proposals

2 min readBy: Garrett Watson, Erica York

President Biden has proposed increases to corporate taxes as part of the fiscal year 2022 budget proposal. Using TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Foundation data on how these tax proposals would impact each congressional district, we isolate the corporate changes to see which districts would have the largest change in tax liability over the next ten years if the Biden corporate tax plan is implemented.

President Biden proposed four major changes to corporate taxation.

  • Raise the federal statutory corporate tax rate from 21 percent to 28 percent.
  • Increase the tax on Global Intangible Low-Taxed Income (GILTI) from 10.5 percent to 21 percent; calculate GILTI on a country-by-country basis; and eliminate the exemption on the first 10 percent of foreign qualified business asset investment (QBAI).
  • Repeal the Foreign Derived Intangible Income (FDII) deduction.
  • Levy a new 15 percent minimum tax on the book incomeBook income is the amount of income corporations publicly report on their financial statements to shareholders. This measure is useful for assessing the financial health of a business but often does not reflect economic reality and can result in a firm appearing profitable while paying little or no income tax. of corporations with at least $2 billion in net income.

While advocates of the proposals argue that corporations must pay more tax for their “fair share,” it is important to remember that corporate taxes are paid by workers and corporate shareholders. The corporation may remit the tax, but workers and shareholders within each congressional district ultimately bear the burden of the tax increases.

The congressional districts most impacted by the President’s corporate tax proposals are largely located on the eastern and western coasts, where business income tends to be earned at a disproportionately higher amount compared to other regions of the U.S.

Congressional districts that encompass large, productive cities such as New York, Los Angeles, Miami, and San Francisco will pay higher aggregate amounts of corporate tax than congressional districts that encompass smaller cities and regions of the country.

Congressional District 2022 Impact 2022-2031 Impact Tax Increase as Share of Total AGI, 2031
NY-12 (New York City) $2.9 billion $26.1 billion 1.4%
CA-18 (San Francisco Bay Area) $2.4 billion $23.2 billion 1.4%
NY-10 (New York City) $2.5 billion $22.4 billion 1.4%
CA-33 (Los Angeles County) $2.4 billion $20.8 billion 1.5%
CA-12 (San Francisco Bay Area) $1.6 billion $15.4 billion 1.3%
CT-4 (Bridgeport-Greenwich) $1.3 billion $13.0 billion 1.2%
FL-19 (Fort Myers/Naples) $1.3 billion $11.5 billion 1.4%
FL-27 (Miami) $1.3 billion $11.3 billion 1.5%
NY-3 (Long Island) $1.2 billion $11.2 billion 1.3%
MA-4 (Southeastern Massachusetts) $1.1 billion $10.5 billion 1.2%

Source: Tax Foundation, “The Impact of the Biden Administration’s Tax Proposals by State and Congressional District,” June 30, 2021.

As a portion of total adjusted gross incomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” (AGI) in 2031, the proposed corporate tax increases would raise anywhere from 1.2 percent of AGI in southeastern Massachusetts’ 4th congressional district to 1.5 percent of AGI in California’s 33rd district in Los Angeles County.

While the impact of the gross tax increases may be felt more by higher earners and be offset for lower earners due to the expanded child tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. (CTC) and earned income tax credit (EITC), the corporate tax increases in President Biden’s plan would disproportionately harm these congressional districts and make the U.S. less internationally competitive. These tax hikes, along with individual tax increases, would also raise taxes on net for 96 percent of congressional districts by 2031 after these temporary credits expire in 2025.

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