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 This perseverance lives on today in the Eastern Plains. Despite
the challenges the Plains faces during the pandemic, eastern Colorado’s farmers,
shop owners, schools, and communities have admirably weathered the storm over
the past couple of years. But now, a new challenge from Washington arises that
could threaten the region’s recovery and future: higher taxes.
As part of a plan to pay for provisions in President Biden’s
Build Back Better package, some lawmakers are aiming to raise taxes like the
corporate tax, as well as a lesser-known tax called the Global Intangible Low
Tax Income (GILTI) rate. While the proponents of this legislative push might
think these tax hikes will only impact large corporations who can afford to pay
them, that is not the entire story. These increases will significantly raise the
tax burdens of businesses small and large alike, with laborers and consumers
feeling the worst of the effects.
Pro 15 serves as a voice and advocate for the 15 counties that make up the
Eastern Plains. Our organization is concerned that these tax increases will do
more harm than good to our communities and come at a time when we need to
support and bolster our economy, rather than make wide-sweeping changes that
could set our economy back to peak-pandemic levels.
 Research from nonpartisan groups such as the Tax Foundation and the Tax Policy
Center has found that corporate taxes are mostly passed onto laborers, with
workers typically bearing anywhere between 50% and 100%. Given that Colorado’s
workers are contending with rising costs of living, stagnating wages, and supply
chain shortages related to the pandemic, adding additional financial burdens at
a time like now seems cruel.
There is also evidence that raising the corporate tax rate has detrimental
effects on our nation’s economy over the long-term. Further research by the Tax
Foundation shows how the implications of a higher corporate income tax rate
compound over time, resulting in an estimated $720 billion reduction in gross
domestic product (GDP) over the next decade. This hit to our economy would be
felt by families, businesses, and communities of all sizes – nowhere would be
left untouched.
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The prospect of a higher GILTI rate also brings its
own set of problems that could have consequences for the Eastern
Plains region. GILTI is a fee placed upon the foreign earnings of
American companies and is the only such fee currently enacted in the
world – nowhere else do countries tax profits made abroad by
domestic companies. As such, American businesses are already
operating at a competitive disadvantage compared to foreign peers
due to the constraints of GILTI. Raising it only compounds the
financial barriers they face.
Research from the National Association of Manufacturers found that a
GILTI increase could result in nearly one million jobs and $20
billion in economic activity lost. Additional research shows that
increasing GILTI could result in up to a 10.9% decrease in domestic
employment.
Considering that many farmers and businesses in the Eastern Plains
import and export products, as well as utilize foreign suppliers, a
GILTI increase would spell trouble for them – it is not just large
multinationals that are affected.
As omicron surges across Colorado and the rest of the country, it is
important that our lawmakers make smart policy decisions that take
us forward, rather than move us back. Increasing the corporate tax
rate and GILTI does not achieve that, but rather puts more barriers
on our road to recovery.
Cathy Shull (Cathy@pro15.org)
is the executive director of Pro 15, a regional advocacy
organization representing the interests of 15 northeastern Colorado
counties: Adams, Arapahoe, Cheyenne, Douglas, Elbert, Kit Carson,
Larimer, Lincoln, Logan, Morgan, Phillips, Sedgwick, Washington,
Weld, and Yuma.
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