Democrats are limited to raising the corporate tax rate from the current 21% to 28% as one of the easiest ways to find new revenue for an infrastructure package.
The big picture: While many senators say President Biden’s next bill should come with a way to pay for it, the White House and its Democratic allies are growing confident they can get there, in part by raising taxes on taxes. societies.
- “We should pay for this one-generation infrastructure package,” Senator John Hickenlooper (D-Colo.) Told Axios. “I look forward to working with my colleagues on how to achieve this goal, including responsibly setting the corporate tax rate.”
Driving the news: The White House begins to telegraph Biden’s priorities for new revenue, without previewing the full strategy.
- “If we had just recovered the (individual) tax rate that it was when Bush was president – the top rate paid 39.6% in federal taxes, which would increase $ 230 billion, ”the president told ABC News.
- And Bharat Ramamurti, deputy director of the National Economic Council, told Bloomberg TV on Tuesday: “The president firmly believes that larger corporations and those people who have done very well in recent decades should pay a little more.”
Ike Brannon, Senior Member of the Jack Kemp Foundation, said Democrats may feel politically isolated, at least in the short term, because “rising corporate tax rates don’t seem to anger many people and their main drawback (reduced economic growth and jobs) are not easily evident “.
Flashback: Prior to the Trump administration, the business community was pushing to reduce the corporate rate from 35% to 25%.
- Trump fell to 21%.
- Biden and his allies are convinced that much of Trump’s business cuts were spent on stock repurchasing rather than new hiring.
Between lines: Democrats suspect that after the negotiations, Congress will set a corporate tax rate of between 25% and 26%, lower than the 28% proposed by Biden. That would raise up to $ 500 billion.
- “Biden believes we need to invest critically in infrastructure and research and development,” said Sarah Bianchi, who advised her during the campaign. “Some of our larger companies may pay a little more to help get this going.”
The other side: “Democrats may think that between 24% and 25% are low-hanging fruits,” said Rohit Kumar, co-director of PwC’s national tax office. “But the battle is not yet united.”
- The business roundtable “will actively oppose efforts to raise corporate taxes,” CEO Joshua Bolten told CEOs last week.
- “Everyone loves infrastructure until you have to figure out how to pay for it,” said Caroline Harris, vice president of fiscal policy for the Chamber of Commerce.