KUALA LUMPUR, March 12 (Bernama) -- Bursa Malaysia’s benchmark index reversed earlier losses to end at its intraday high on Thursday, staging a late rebound during the final hour of trading. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.23 points to 1,711.01 from yesterday’s close of 1,708.78. The market bellwether opened 8.09 points lower at 1,700.69, and slipped to its day’s low of 1,694.80 during the mid-morning session before gaining momentum in the afternoon trading toward the close. However, market breadth was negative, with losers leading gainers 538 to 529. A total of 525 counters were unchanged, 1,075 untraded, and 17 suspended. Turnover climbed to 3.01 billion units worth RM3.53 billion from Wednesday’s 2.70 billion units worth RM2.78 billion.
If the Trump administration’s tariff policy has demonstrated anything, it is this: the US economy can withstand higher taxes on corporate America without collapsing.
That lesson is increasingly relevant as federal deficits widen and government debt climbs to record levels.
Tariffs Raised Billions — Growth Held Up
Tariffs operate like taxes. Importers pay them, then either absorb the cost or pass it on to consumers.
In the second half of 2025, tariffs generated US$29.5 billion per month in additional revenue for the US Treasury.
Yet instead of slowing sharply:
2025 GDP forecasts increased from 1.35% to 2.2%
The economy remained resilient
Corporate profits stayed strong
Key Point: The expected economic damage from higher “tax-like” tariffs did not materialize.
This outcome challenges supply-side arguments that higher corporate taxes inevitably stifle investment and growth.
The US Remains a Low-Tax Economy
The United States ranks near the bottom among OECD nations in tax-to-GDP ratio:
US tax-to-GDP ratio: 25.2%
OECD average: 33.9%
Meanwhile:
The corporate tax rate was reduced from 35% to 21% under the 2017 Tax Cuts and Jobs Act.
Corporate tax revenue has fallen from 4% of GDP in 1960 to just 1.8% today.
S&P 500 profit margins reached a record 13.2% in 2025.
Corporate earnings have averaged 9% of GDP since 2021, historically elevated levels.
A Modest Increase Could Raise Significant Revenue
In 2024:
Corporate tax receipts totaled US$567 billion (1.8% of GDP)
US GDP stood at US$31.5 trillion
If corporate tax revenue rose to 2.5% of GDP, receipts would approach US$800 billion annually — roughly US$233 billion more per year.
That increase is close to what tariffs were expected to generate.
Unlike tariffs:
Corporate taxes can be calibrated to protect smaller businesses.
They are set by Congress.
They provide policy stability instead of executive-driven volatility.
Key Point: A small percentage increase in corporate tax contribution could materially narrow the deficit.
The Fiscal Reality
In 2025:
Federal spending: US$7 trillion
Revenue: US$5.2 trillion
Deficit: US$1.8 trillion (5.8% of GDP)
The United States Congressional Budget Office projects:
Deficits exceeding US$3 trillion annually within a decade
Public debt rising from 99% of GDP to 120%
The US does not face a growth crisis. It faces a structural revenue gap.
Historical Evidence Suggests Growth Can Coexist With Higher Taxes
In the 1950s:
Corporate tax rates were significantly higher
GDP grew 4.2% annually
The S&P 500 rose 193% over the decade
Even in 2006, corporate receipts were near 2.5% of GDP while the economy expanded above 3%.
Supply-side tax cuts in the 1980s did not eliminate deficits. Budget surpluses returned only in the late 1990s under President Bill Clinton.
Bottom Line
Tariffs inadvertently revealed that corporate America can absorb a higher effective tax burden without derailing economic growth.
A modest increase above the current 21% corporate tax rate could:
Raise hundreds of billions in annual revenue
Improve fiscal sustainability
Avoid the distortions and unpredictability associated with tariff policy
The broader takeaway is clear: The US economy is resilient enough to support slightly higher corporate taxes.
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