Democrats are raising the tax rate from its current 21% to 28% as one of the easiest ways to get new revenue for an infrastructure package.
The whole picture: While many senators suggest that President Biden’s next big card bill should have a way of paying for it, the White House and its Democratic allies are confident that they can get there in part by raising corporate taxes.
- “We have to pay for this one-time infrastructure package,” Senator John Hickenlooper (D-Colo.) Told Axios. “I am eager to work with my colleagues to achieve this goal, including the responsible determination of the corporate tax rate.”
Drive the news: The White House begins to telegraph Biden’s priorities for new income – without anticipating the full strategy.
- ‘If we just take the (individual) tax rate back to what it was when Bush was president – the highest rate paid 39.6% to federal taxes – that would yield $ 230 billion, “the president told ABC News.
- Bharat Ramamurti, deputy director of the National Economic Council, told Bloomberg TV on Tuesday: “The president believes that the biggest companies and those who have done very well in recent decades should pay a little more.”
Ike Brannon, a senior fellow at the Jack Kemp Foundation, Democrats may feel politically isolated, at least in the short term, because an increase in corporate tax rates does not seem to hurt too many people, and their major disadvantage – reduced economic growth and jobs – is not clear. ‘
Flash back: Before the Trump administration, the business community insisted on lowering the corporate rate from 35% to 25%.
- Trump dropped it to 21%.
- Biden and his allies are convinced that Trump’s corporate cuts will buy back shares rather than make new appointments.
Between the lines door: Democrats suspect Congress will negotiate a tax rate of 25% to 26% after negotiations, less than Biden’s proposed 28%. It will generate as much as $ 500 billion.
- “Biden believes we need to make critical investments in infrastructure and research and development,” said Sarah Bianchi, who advised him during the campaign. “Some of our biggest companies may pay a little more to make it happen.”
The other side“Democrats may think that 24 to 25% of fruit hangs low,” said Rohit Kumar, co-leader of PwC’s national tax office. “But the fight is not over yet.”
- The Business Roundtable “will actively oppose efforts to raise corporate taxes,” CEO Joshua Bolten told reporters last week.
- “Everyone loves infrastructure until you have to figure out how to pay for it,” said Caroline Harris, vice president of tax policy at the Chamber of Commerce.