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Jeffrey Miron and Jacob Winter

Occupational licensing — for doctors, lawyers, plumbers, barbers, and innumerable other trades — claims to improve service quality. Much evidence contradicts this claim. And even if licenses sometimes improve quality, they reduce the supply of services and therefore raise prices.

Recent research (Cato Research Brief no. 378) identifies another negative of licensing: reducing earnings in other occupations. The analysis “finds that a 10 percentage point increase in the share of licensed workers … is associated with earnings that are 1.6–2.3 percent lower for all occupations [with similar skills]. These negative effects are stronger for female, non‐​Hispanic black, and foreign‐​born Hispanic workers.”

The explanation is that licensing makes it harder for workers to change occupations. “For example, consider a worker who can choose to work as a waiter or a barber. If being a barber requires a license (and being a waiter does not), then restaurants may be able to pay waiters less without concern they will quit to become a barber.”

In addition to these negatives, research (Cato Research Brief no. 356) finds that licenses make it more difficult for consumers to find needed service providers.

What’s the solution? Elimination of licenses. Short of elimination, states should recognize licenses issued by other states. Research (Cato Research Brief no. 357) suggests this would increase “employment of licensed occupations without sacrificing service quality.”

Clark Packard and Alfredo Carrillo Obregon

Earlier this week, President Biden welcomed Japanese Prime Minister Kishida for an official visit and state dinner. As tensions in the Pacific mount, particularly with respect to China, Tokyo is an increasingly important ally for the United States. Indeed, the president and administration staffers emphasized the importance of upgrading the US‐​Japan alliance into a “global partnership” and both leaders announced measures for increased cooperation in defense, technological innovation, economic security, and diplomacy, among other areas.

Yet history has shown Washington’s international economic policies often belie its lofty rhetoric about the importance of the bilateral relationship with Japan, as domestic politics continue to triumph over sound policy. This self‐​defeating pattern hurts the United States both diplomatically and economically. Though by no means comprehensive, here’s a small sampling.

Nippon Steel

A significant “elephant in the room” during Prime Minister Kishida’s visit was the possible acquisition of US Steel by Japan’s Nippon Steel and the political opposition to the deal coming from multiple quarters in the US political system—and most notably from President Biden.

Indeed, the president recently stated that it was “vital” for US Steel “to remain an American steel company that is domestically owned and operated.” As our Cato colleague Scott Lincicome recently explained, Biden’s statement belies the fact that US Steel is a shell of its former self, and both industry experts and US steel‐​consuming manufacturers believe that the acquisition would benefit US Steel, the American workforce, and the broader manufacturing sector.

It also stands in sharp contrast with the reality—as Biden himself acknowledged during the visit—that Japan is the biggest source country for foreign investment in the United States and Japanese investments have resulted in jobs for nearly one million Americans. Such investments have also often benefited the US companies being acquired and their surrounding communities.

And insofar as Biden’s opposition to the steel deal is for national security purposes, it clashes with the state of US‐​Japan defense cooperation, which has been close for decades and, as stated during the visit, is planned to increase in the coming years. Indeed, Japan hosts US military personnel and Department of Defense (DOD) civilians and their families and acquires more than 90 percent of its defense imports from the US; Japanese investors have not been of concern to the Committee on Foreign Investment in the United States (CFIUS) (which is currently reviewing the Nippon‐​US Steel deal) since the 1980s; and Nippon Steel is no longer closely connected to the Japanese government. Twenty‐​three percent of the company is owned by non‐​Japanese entities.

In sum, most independent observers understand that Biden’s opposition is motivated by electoral politics—as is Donald Trump’s own opposition to the deal—and not economics or national security.

“National Security” Tariffs on Steel and Aluminum

In 2018, the Trump administration declared imported steel and aluminum from every country, including Japan, to be a “national security” threat to the United States and then imposed heavy tariffs (25 percent on steel and 10 percent on aluminum, respectively). It was obviously nonsense; imports from a country the United States is obligated to defend militarily poses zero national security risk. President Trump’s own Secretary of Defense noted that the military only required about three percent of domestic steel capacity. Not only did the tariffs hurt the United States economically, they hurt Washington’s standing in Japan. Eventually the Biden administration announced it had replaced the tariffs on imports from Japan with a tariff‐​rate quota, allowing a limited amount of steel and aluminum to enter the country without being subject to the 232 tariffs.

TPP

The Trans‐​Pacific Partnership (TPP) was envisioned as a comprehensive trade agreement that would deepen economic cooperation in the Pacific with a mind toward reorienting supply chains outside of China. There were 12 original signatories, but the United States and Japan were arguably the primary proponents of the agreement. The Japanese government faced intense domestic political opposition to the deal, but stuck its neck out because it understood the benefits of deeper economic integration with the United States and the Pacific region more generally, especially in light of China’s economic rise (and abusive trade and investment practices).

Washington, however, didn’t uphold its end of the bargain. TPP became a political hot potato during the 2016 presidential campaign with both major party candidates opposing the deal. Once in office, the Trump administration made an ill‐​advised decision to walk away from the agreement. This marked a turning point: the first time the United States failed to implement a trade agreement it negotiated and signed. At the behest of the Japanese government, the TPP was renamed the Comprehensive and Progressive Trans‐​Pacific Partnership (CPTPP) and moved forward without the United States.

Though imperfect, CPTPP was a good deal economically and strategically. Today, American consumers face higher prices for products from CPTPP bloc countries than they would if Washington had embraced the agreement. Likewise, American producers face higher trade barriers than their competitors within the bloc. On top of that, Washington retreated from a vital standard‐​setting role by walking away from the deal—a loss of soft influence in an increasingly vital part of the world.

Washington’s about‐​face on the deal cost the United States some credibility with Tokyo. Japan continues to press the United States to return to the CPTPP. But, to date, Washington has shown no appetite to accept the political risks to do the responsible thing and rejoin.

Automotive Voluntary Export Restraints

As Dr. Douglas Irwin notes in his masterful, comprehensive history of US trade policy, Clashing Over Commerce, Japanese producers’ share of the US automotive market was about 1 percent as late as 1968. After the oil shock and attendant price spikes in 1973, American consumer preferences shifted and demand increased for smaller, more fuel‐​efficient cars (a segment largely controlled by Japanese producers; the Big Three at the time—Chrysler, Ford and GM—ceded that segment of the market). As a result, Japanese imports began to grow. Calls to restrict Japanese autos in the US started to proliferate around Washington in the late 1970s.

In the early 1980s, over the objections of OMB Director David Stockman, Treasury Secretary Don Regan, and Chairman of the Council of Economic Advisers Murray Weidenbaum, the Reagan administration pressured the Japanese to voluntarily limit its automotive exports to the United States by about 8 percent. The automotive voluntary export restraints (VERs) were agreed to by the Japanese government and its auto manufacturers because the alternative was a stiff tariff. The VERs were initially in place for three years. But then, facing reelection in 1984 and not wanting to alienate Midwestern auto workers, the Reagan administration once again pressured Japan to renew the VERs. In other words, like the Nippon deal, the automotive VERs were largely driven by short‐​term, domestic political concerns—at the expense of long‐​term geopolitical objectives and sound economics.

For Americans, it was estimated that the VERs increased the price American consumers paid for Japanese cars by about $1,000 at the time or more than $3,000 in today’s dollars—about 14 percent above what they would have paid without the VERs. Likewise, the increased prices for Japanese imports allowed domestic producers to raise their own prices.

A few years ago, our Cato colleague Scott Lincicome provided a detailed summary of the harms done by the VERs. Contrary to claims from certain protectionists, none of the results of the VERs were positive for the United States. Japan eventually dropped the VERs in 1994 after they were abolished by the Uruguay Round Agreements, which converted the General Agreement on Tariffs and Trade into today’s World Trade Organization.

Japan was largely compliant with Washington’s requests for VERs if for no other reason than their national security depended on the United States’ security guarantees—and they feared a heavy tariff would be even worse. But the VERs very clearly caused diplomatic frictions between Washington and Tokyo, on top of the self‐​defeating economic problems associated with the restraints.

Conclusion

In recent years, policymakers have increasingly talked about the concept of “friendshoring”—strengthening trade and investment ties with close allies—as a new paradigm to guide US international economic relations in light of intensifying competition with China and legitimate concerns over Beijing’s troublesome practices. Yet in a recent test case for its commitment to this new framework—Japanese-based Nippon Steel’s proposed acquisition of US Steel—Washington failed miserably. Indeed, the Biden administration’s opposition to the Nippon deal is not an outlier—it is the latest in a long line of international economic policy affronts to Japan.

If Washington is truly serious about confronting Chinese economic practices, it needs allies like Japan—and policy should reflect the seriousness of the challenge.

David J. Bier

The House of Representatives impeached Department of Homeland Security (DHS) Secretary Alejandro Mayorkas, and now some senators are pressing to hold a trial. As I’ve explained, the charges against Mayorkas are meritless. I have also listed all the ways that this administration has tried to increase immigration enforcement since January 2021. But one further complaint is that ICE has released convicted criminals or people with pending criminal charges, yet the broader context is that this has become less likely under Mayorkas.

Figure 1 shows the number of individuals released by Immigration and Customs Enforcement (ICE) when they have criminal convictions or pending criminal charges from fiscal year 2019 to 2024 through half the fiscal year. It shows that releases of such individuals fell from 34,415 in 2019 to 15,514 in 2023. In 2024, the current pace would be 13,623—a 60 percent reduction in those releases. (Note: ICE has not published data on releases before 2019.)

Figure 2 shows the same data on a monthly basis, revealing a significant drop in ICE removals under the Biden administration starting in mid‐​2021. The monthly ICE data on releases starts in FY 2021.

Figure 3 shows the number of criminal releases as a percentage of criminal arrests on a quarterly basis. This shows that, except for his first quarter in office, Biden has released a lower percentage of those arrested than Trump did from October 2020 to December 2020, falling from 27 percent of arrests to 17 percent in the most recently available quarter. This shows that falling releases are not just a consequence of falling arrests. In fact, in the most recent quarter, ICE arrested nearly 1,500 more people with pending criminal charges or criminal convictions than in the final quarter of the Trump administration.

Of course, ICE is just one agency, and Customs and Border Protection (CBP) also releases people. But the point is that people are wrong to conclude that the phenomenon of releasing people with criminal convictions or charges is unique to the Biden administration. As the Trump administration noted in 2019, DHS recognizes “the need to prioritize extremely limited detention resources (including through the release of aliens not subject to mandatory detention, or who do not appear to pose a public safety threat or flight risk).”

Nonetheless, it’s also interesting to note that the Trump ICE released a higher number of these types of immigrants in 2020 than the Biden administration has, even though the total number of releases was much lower, as Figure 4 shows. Immigrants charged with or convicted of crimes were 34 percent of releases in 2020 compared to 10 percent in 2023.

How concerned should people be about these releases? As I’ve previously noted, most immigrants with criminal convictions are convicted of nonviolent crimes like drug possession, illegal entry, or non‐​DUI traffic offenses. Just 11 percent were convicted of violent crimes. Unfortunately, we don’t know the breakdown of the crimes that people who were released committed. But we can say that nearly half of the convicted criminals entering ICE’s custody were not convicted of felonies. Moreover, serious criminals aren’t likely to be released absent a court order under this administration’s priorities for enforcement.

ICE should be prioritizing the detention and removal of criminals convicted of crimes that threaten the safety of others, but every administration, including the Biden administration, spends far more resources on people with no criminal history at all. Right now, over two‐​thirds of ICE detainees are neither charged with nor convicted of any crime—even immigration crimes—and the same is true of 70 percent of removals.

Law enforcement agency resources are finite, and they should be devoted to targeting serious criminals and threats to the public, not micromanaging our demographics or labor force. Opportunity costs are real. Every minute that ICE or CBP wastes on pursuing someone seeking to work here is a minute they are not pursuing someone who may threaten the public. To end these wasteful practices, America should rethink its immigration system to provide legal ways for people to come to and work in this country.

Colleen Hroncich

Tarla Gernert grew up surrounded by educators—her mom, grandma, and aunt were all teachers. So it seemed natural to her to follow that same path. But it was never a great fit for her. “Every time I would teach a lesson, I would know that some of the kids were really ready for it,” she explains. “Some of the kids, I knew that if I explained it to them for a day or two, they would get it. And there was always a group of kids that I felt like they’re never going to get this. And much of what I was teaching I felt was really not relevant to them.”

After a few years, she took a leave of absence from the classroom and moved into an academic advisor position at her alma mater. She enjoyed that role, but when she had children she decided to stay home with them. They moved from Virginia to Michigan to North Carolina, with a variety of schooling options, including a little bit of homeschooling, along the way.

When they moved to North Carolina, Tarla decided to see what homeschooling was like there. She reached out to the local homeschooling community, and they embraced her family. “They had art classes, and music classes, and PE classes, and all kinds of things. They had Friday classes where it was kind of a co‐​op, but you paid the teachers a little bit to teach,” she recalls. “It was just this wonderful community down there, and we just fit right in.”

They moved back to Michigan after a few years, and she didn’t find anything like what they’d had in North Carolina. She says, “I kept talking about how in North Carolina, we did this. And in North Carolina, we did that. One of my friends said, ‘I think if you start what you had in North Carolina, people will come.’” And that’s how Homeschool Connections Educational Services Inc. came to be.

Tarla didn’t want a traditional homeschool co‐​op, where parents typically teach each other’s kids on a volunteer basis. “Whenever we were part of a co‐​op, it was difficult because the level of quality wasn’t necessarily there,” she explains. “I realized you can’t really fire volunteers, so with this program, we wanted to hire and pay teachers.” She found a woman who had a masters in bilingual education to teach Spanish and a microbiologist to teach biology. A multitalented artist, author, and actress taught the children art, writing, and acting.

Homeschool Connections started in 2002 with 32 kids at a church in Rochester Hills, MI. The next year, it grew through word of mouth, with the kids telling their siblings and friends to come. Before too long, parents were coming to Tarla wanting to start a similar program at other churches, which work well because they’re usually empty during weekdays.

The program is designed to be held one day per week with each class meeting for an hour. For the younger kids, they offer very hands‐​on, activity‐​based, high‐​interest classes. They also do science experiments, which is a great help for homeschooling families. In the upper grades, Tarla says it can be a full program, including research papers, high school math, and science labs—the things that can be trickiest for homeschooling parents. The kids work at home for most of the week and then the weekly classes include discussions of what they’ve read and other group lessons and activities.

There are now in‐​person options at several churches in southeast Michigan. Depending on the location, classes are held on Monday, Tuesday, or Friday. There’s also an online distance learning option that includes pre‐​recorded lessons and a weekly virtual class session. Teachers and families can participate at more than one location to create a schedule that works for them. Classes are generally geared toward an age range, not a specific grade, which provides more flexibility in content and ability level.

“Some people come for one class. Others come for a whole day. And then there are others that might come for two or three days, depending upon what their schedule is and what they need,” says Tarla.

In addition to the more academic pursuits, there’s a strong social and community aspect to Homeschool Connections. They host coffee mornings for moms to help support them in their homeschooling journeys. They also provide opportunities for the students to get together for game nights, dances, bowling, and roller skating.

In 2017, Tarla co‐​founded High​PointHy​brid​.com which offers in‐​person support twice a week for students who attend Highpoint Virtual Academy of Michigan. There are locations throughout southeast Michigan for students from kindergarten through twelfth grade.

“What I’ve learned through all of this is I don’t really enjoy being the teacher,” Tarla admits. “But I love creating educational environments where people can learn.”

Patrick G. Eddington

One point I always make when talking about national security issues, and especially those involving surveillance powers, is this: when in doubt, always bet on fear.

This afternoon, the House of Representatives wrapped up an extremely tense and at times quite acrimonious debate on reauthorization of Title VII of the Foreign Intelligence Surveillance Act (FISA), and specifically the FISA Section 702 warrantless electronic mass surveillance program. The final vote on the bill was 273–147.

An amendment to require the FBI to get a warrant to access the stored communications of Americans collected under the 702 program failed in a nail‐​biter, 212–212. Opponents of the warrant requirement got key help from an unlikely source: former House Speaker Nancy Pelosi (D‑CA), who made an impassioned plea to reject the warrant requirement and support the underlying bill. Her position was rather ironic, given her prior support for exactly this kind of warrant requirement in 2014, 2015, and 2016. Fierce opposition from the Biden administration also helped sink the amendment.

Another amendment allowing Members of Congress to sit in during FISA court debates and requiring quarterly 702 query reports from the FBI passed easily, as did an amendment adding fentanyl trafficking to the approved uses of Section 702 collection—a flagrant and dangerous expansion of FISA authority that will no doubt make the failed “War on Drugs” even worse.

Even more ominously, an amendment to change the definition of “electronic communications provider” also passed, meaning that a vastly greater number of businesses’ communications may also be subject to Section 702 collection and storage.

One change made to the underlying bill during negotiations was reducing the reauthorization time of Title VII from five years to two years. That’s a tactical victory for reformers that may have larger implications down the road, as the clear expansion of FISA surveillance this bill represents virtually guarantees additional abuses of the constitutional rights of Americans.

Given the Biden administration’s stated support for the bill absent the warrant requirement, it seems certain that Biden’s national security team will push the Senate to simply move the House bill as passed. Whether that will happen is something we’ll get a better sense of next week.

Patrick G. Eddington

In 24 hours, we’ve gone from former President Donald Trump demanding “KILL FISA” to Trump apparently working out a deal with House Speaker Mike Johnson (R‑LA) to cut the FISA Section 702 reauthorization period from five years to two.

Accordingly, shortly after 8 p.m. on April 11, the House Rules Committee reported out a modified version of the Reforming Intelligence and Securing America Act (RISAA, H.R. 7888) with the new two‐​year extension. Several amendments, including one that would require FBI agents to get a probable cause‐​based warrant to access stored FISA Section 702 data on Americans, were also made in order.

Assuming the new rule governing debate on H.R. 7888 actually passes the House this time—and that’s not a given—it seems likely that floor debate on the base bill and the amendments will happen either late Friday morning or early next week. Whether the Senate will accept whatever final FISA reauthorization bill actually passes the House also remains to be seen.

Marc Joffe

With California’s very late publication last month, all fifty states have now produced audited financial reports for their 2022 fiscal year. The availability of these reports allows us to compare the balance sheet health of all state governments on an apples‐​to‐​apples basis because they all use the same accounting standard.

Former California State Senator John Moorlach, a certified public accountant, has implemented a simple but powerful approach to analyzing state (and local) government finances. He takes the Unrestricted Net Position (UNP) for each state government and divides it by the state’s population.

UNP is a concept requiring some explanation. Net position is synonymous with net worth and is simply the difference between an organization’s assets (e.g., cash, receivables, buildings) and liabilities (e.g., payables, bonds outstanding). These remaining balances may be tied up in illiquid assets, making them not readily available. Any residual assets that are not spoken for make up the government’s “unrestricted net position”.

UNP is a balance sheet concept and is not typically found in state budgets. The measure indicates how fiscally responsible a state government has been over many recent years, not just the current year.

Moorlach’s analysis only covers a state’s “governmental activities”. He excludes “business type activities” like public utilities because they vary so much across governments. Focusing only on core governmental functions allows for more of an “apples to apples” comparison.

The accompanying map shows per capita unrestricted net position by state for fiscal year 2022. States colored in shades of red on the map have a negative unrestricted net position, indicative of poor financial health. In most cases, states that are in the red financially turn out to be blue politically: the six states with the most negative unrestricted net positions have Democratic legislatures. Deep blue New York and California are also in the red financially.

But Republican governance is no guarantee of fiscal probity. Texas has a UNP per capita of -$2,590 despite the lack of Democrats controlling policy at the state level. This deficit is fully accounted for by Texas’s large liabilities for underfunded public employee retirement benefits, including pensions and retiree healthcare. Other states that are both red financially and politically include Missouri and South Carolina. By contrast, Florida is above water, albeit slightly.

The financially strongest states, Alaska, North Dakota, and Wyoming benefit from having “permanent funds” based on natural resource endowments in each of these states.

Chris Edwards

After five rounds, tens of thousands of online voters have chosen the most wasteful federal program: the subsidies and tax breaks in the Inflation Reduction Act (IRA) of 2022. The results from Spending Madness suggest that the highest priority budget cut for Congress is the vast corporate welfare unleashed by the IRA.

The law is flooding the economy with $1 trillion of spending subsidies and narrow tax breaks for corporations across many industries, including energy, batteries, and automobiles. It was signed into law by a president who regularly criticizes tax breaks for big corporations yet has increased corporate tax loopholes by 92 percent.

The federal government has been subsidizing energy schemes since at least the 1970s, and there are many failures. Scott Lincicome has described the corruption problem of business subsidies. If the IRA subsidies are not repealed, we expect many failures and scandals in the months and years ahead.

Adam Michel and Travis Fisher note that the estimated cost of the IRA has tripled since the law was passed. Congress should at least cut IRA subsidies to match the original estimated costs, but over the longer term, it should phase out all energy subsidies and allow competition on a level playing field. Investors and entrepreneurs in open markets would continue to pursue innovations in cleaner fuels, batteries, automobiles, and other technologies.

Spending Madness 2024 profiled 32 budget cuts to get federal debt under control. Congress should cut every part of the budget, including Social Security, health programs, aid to the states, business subsidies, and welfare. Romina Boccia has suggested strategies to get reforms underway, and Downsizing the Federal Government discusses cuts to dozens of federal agencies.

The latest Congressional Budget Office projections show the government adding $20 trillion of debt in the coming decade, and experts are warning that interest rates on the debt could spike. Now is the time for Congress to begin cutting, and the programs profiled in Spending Madness are a great place to start.

Thanks to everyone who participated in Spending Madness 2024.

Patrick G. Eddington

These kinds of things can be hard to quantify, but I imagine that former President Trump’s blistering TruthSocial post this morning telling Congress to “Kill FISA” probably had some impact on the 19 House GOP members who voted against the procedural motion to bring the FISA “reform” bill to the House floor. The question now is what happens next?

One thing we can count on is that Biden administration officials and their pro‐​surveillance allies in Congress will now step up the fear‐​mongering over the looming April 19 expiration of the existing FISA Section 702 program. The reality is that any currently FISA Court (FISC) authorized surveillance will be unaffected, and FISA’s original emergency authorization powers (as enacted in 1978) provide for warrantless surveillance of a target for 24 hours.

Moreover, as I’ve previously reported, the Central Intelligence Agency ran a program very similar to FISA Section 702 during the Clinton administration under Executive Order 12333. Any claims that American intelligence will fatally “go dark” if there’s a lapse in Section 702 authority are simply false.

In terms of where Speaker Mike Johnson (R‑LA) can go from here on FISA, it would seem he has two basic options: 1) bring up another temporary extension of the program in the hopes of finally getting a FISA bill through the House later this month or sometime in May, or 2) restart the process in the House Rules Committee with one of the existing FISA bills discussed to date and allowing a far more open legislative process on the House floor. While either of those could still happen this week, the odds are better that a renewed FISA push in the House will happen early next week.

Adam N. Michel

President Joe Biden proposes raising the corporate income tax rate, capital gains tax rate, and personal income tax rates, among other tax increases. These hikes would make the United States an international outlier, with some of the highest tax rates in the developed world.

In his fiscal year 2025 budget request to Congress, President Biden proposed about a dozen new or higher taxes that would raise close to $5 trillion in additional revenue over a decade (according to their optimistic forecasting). I detailed the specifics in an earlier piece, “What Does Biden Plan for the Tax Code?”

The Biden tax hikes would primarily fall on capital income, leading to less domestic investment, fewer jobs, and slower economic growth. According to estimates from the Tax Foundation, the budget proposal would reduce long‐​run GDP by 2.2 percent, hurt wages, and eliminate 788,000 jobs. This is likely a significant understatement of the negative economic effects. The analysis notes that the budget’s proposals will make America an international outlier on individual and corporate taxes.

The following four charts use data from the Organisation for Economic Co‐​ordination and Development (OECD) to show tax rates on corporate income, dividends, total integrated taxes on corporate income paid out as dividends, and personal income. The data include national and subnational taxes.

The United States currently exceeds the OECD average in all four tax measures. The charts also show that under Biden’s budget proposals, American tax rates move from just above average to an outlier nation, with some of the highest tax rates in the OECD.

Figure 1 shows that Biden’s proposal to increase the federal corporate income tax rate from 21 percent to 28 percent would increase the United States’ combined state and federal corporate tax rate to 32 percent. The US would have a corporate income tax rate nearly 50 percent higher than the OECD average and second highest behind Colombia’s 35 percent. Not included in the OECD data is China, which has a 25 percent corporate tax rate.

Figure 2 shows net personal dividend tax rates. Under Biden’s proposal, capital gains and dividends would be taxed at a top income tax rate of 39.6 percent, plus a higher net investment income tax rate of 5 percent. After these tax increases, the United States would have the second‐​highest dividend taxes in the OECD.

Figure 3 combines the taxes in Figure 1 and Figure 2. It shows the total integrated tax rate on corporate income that is first taxed by the corporate income tax and then taxed a second time when it is distributed as a dividend to shareholders. Under Biden’s corporate and investment tax increases, distributed profits in the United States would face a 66 percent integrated tax rate, seven percentage points higher than any other country in the OECD. Tax Foundation data show a similar discrepancy for profits realized as capital gains.

Figure 4 shows the top statutory personal income tax rates on wage income. Under current law, US income tax rates are just barely above the OECD average. By raising the top federal income tax rate from 37 percent to 39.6 percent, Biden would move the US almost 4 percentage points above the average.

Such high proposed tax rates on the most productive Americans are juxtaposed with US revenue collection as a share of the economy, which is below the OECD average. The current below‐​average tax burden is an economic benefit to American workers. In a global economy, the US must compete for international investment, jobs, and talent. Imposing internationally high tax rates on American workers, investors, and employers would not address the US fiscal problems and would come at a high economic cost.

Mattan Schachner contributed to this post.