President Joe Biden speaks to reporters on the South Lawn of the White House in Washington, United States, on March 14, 2021.
Cheriss May | Reuters
President Joe Biden said Monday he was not concerned that a plan to increase the tax burden on American companies would put a damper on the US economy if it emerges from the Covid-19 pandemic.
When asked if he was concerned that the White House’s plan to raise the corporate rate to 28% could harm an already fragile recovery, Biden replied “not at all”.
“There is no evidence of this,” said the President of the South Lawn of the White House. “Here you have 51 or 52 companies in the Fortune 500 that haven’t paid a penny in taxes in three years.”
The proposed corporate rate hike is part of the government’s drive to fund its $ 2 trillion infrastructure proposal, a plan many Democrats promised to adopt in the 2020 election cycle.
While politicians from both parties agree that American roads and bridges are in dire need of repair, fierce disagreements remain over other priorities and the ultimate scope of the bill.
Biden and Progressive Democrats advocate spending including $ 621 billion on transportation infrastructure, $ 400 billion to care for elderly and disabled Americans, $ 300 billion to improve drinking water and broadband access, and another $ 300 billion for the construction and retrofitting of affordable housing.
Republicans, who were largely opposed to Biden’s $ 1.9 trillion Covid bailout last month, said the president should dump current legislation and speak out almost unanimously against changes to former President Donald Trump’s tax cuts.
Trump’s 2017 tax cuts, widely viewed as his landmark legislative victory, lowered the corporate tax rate from 35% to 21%, which was one of the highest tax rates among developed countries at the time. Biden’s infrastructure plan would partially reverse Trump’s plan by increasing the rate to 28%.
Republicans fear that increasing the corporate rate so soon after lowering it could make the US a less attractive option for companies considering where to locate new factories, jobs and profits.
For the past 30 years, U.S. companies have tried to save taxes by starting up again in Bermuda, the Cayman Islands, Ireland, and other offshore tax havens where corporate rates are lower.
Even Conservative Democratic Senator Joe Manchin of West Virginia said Monday he was opposed to the White House plan if it were to raise corporate tax to 28%. He signaled that he could be open to a partial retraction of Trump’s corporate tax cut to 25% from Biden’s proposed 28%.
“As the bill exists today, it needs to be changed,” Manchin told Hoppy Kercheval, host of West Virginia Metro News’ Talkline program. “In my opinion [the corporate rate] should never have been below 25%, that’s the global average. And basically any company would have said that it was fair. “
Manchin, routinely a major swing voter in a 50:50 split in the Senate, could single-handedly doom the infrastructure bill to failure if Democrats choose to push the measure through Congress by budget vote.
Amid these concerns, Treasury Secretary Janet Yellen seeks to inspire other nations to impose a minimum tax on businesses to ensure that no nation gains a competitive advantage.
“We are working with the G-20 countries to agree on a global minimum tax rate for companies that can stop the race to the bottom,” Yellen said on Monday in prepared remarks to the Chicago Council on Global Affairs. “Together we can use a global minimum tax to ensure that the world economy thrives on a level playing field in the taxation of multinational corporations, promoting innovation, growth and prosperity.”
As of Monday afternoon, it was unclear whether Manchin had heard Yellen’s plan before his comments. The Biden plan would also increase the offshore corporate income tax rate from 10.5% in the Trump era to 21%.