Scandinavia Understands the Value of Low Corporate Taxes. Why Doesn't Joe Biden?

The president's proposed tax hike would fall on workers. This isn't a controversial point.


Scandinavia is supposed to be a democratic socialist model for America: a land of low poverty, free college, and free health care. That comes with higher taxes—but not across the board. The governments of Denmark, Sweden, and Norway all understand that relatively low corporate taxes are better for productivity, and thus better for society.

President Joe Biden disagrees. He wants to raise trillions for infrastructure spending by hiking America's corporate tax rate from 21 percent to 28 percent. Denmark and Norway, by contrast, have a 22 percent corporate tax rate, while Sweden's sits at 20.6 percent.

Indeed, the U.S.'s current corporate tax rate already puts it right in line with some of the most centralized welfare states—the very same ones that politicians like Sen. Bernie Sanders (I–Vt.) tout as an end goal.

Prior to 2017, the U.S. corporate tax rate was a stratospheric 35 percent, the highest in the developed world. That year's Tax Cuts and Jobs Act lowered corporate taxes to the current rate, which many panned as a boon for the wealthy.

It's true that corporate tax cuts likely help the rich get richer. But they also likely help the poor get richer. That is not a particularly controversial point.

"High corporate taxes divert capital away from the U.S. corporate sector and toward noncorporate uses and other countries," wrote Mihir A. Desai, the Mizuho Financial Group Professor of Finance at Harvard Business School, in a 2012 issue of the Harvard Business Review. "They therefore limit investments that would raise the productivity of American workers and would increase real wages. This is the cruel logic of a corporate tax in a global economy—that its burden falls most heavily on workers."

A research paper from the nonpartisan American Economic Association found that workers shoulder approximately 50 percent of the corporate tax burden, with the bulk of that falling on "low-skilled, young, and female employees"—in other words, the most vulnerable groups. As it pertains to Biden's hike specifically, experts estimate that between 66 to 100 percent of the strain will fall on workers.

On the campaign trail, Biden zeroed in on companies like Amazon for paying what he claimed was too little in taxes. Yet the U.S. tax code was specifically reformed over the years to incentivize investment, innovation, and growth, all things that directly impact workers' well-being. The social democrats of Scandinavia understand how that works. Why doesn't Biden?