Corporations cut up on whether or not to battle company tax hike
President Joe Biden speaks during his first press conference on March 25, 2021 in the East Room of the White House in Washington, DC.
Jim Watson | AFP | Getty Images
The U.S. business community is trying to figure out how to tackle President Joe Biden’s infrastructure plan, which will include higher corporate taxes to fund at least $ 2 trillion in government spending.
Several prominent corporate groups such as the US Chamber of Commerce are opposed to the proposed tax increases. Behind the scenes, however, some companies are wondering whether to fight a major battle over American companies’ calls for an infrastructure overhaul, according to those familiar with the matter.
Lobbyists and other DC influencers told CNBC that they have received calls from anxious corporate customers wanting advice on their way forward. Some of the people declined to be featured in this story in order to speak freely about ongoing private conversations.
The White House revealed the plan on Wednesday, and Biden discussed it in Pittsburgh later that day. There is a demand to raise the corporate income tax rate from 21% to 28%. “Nobody should be able to complain about it,” Biden said during his remarks as he discussed possible concerns about the increase in corporate tax rates.
In some cases, corporate customers discussed with lobbyists who may be negotiating with the White House and Congressional Democrats about possible compromises in raising the corporate rate to 28%, according to a lobbyist who represents tech giants and Wall Street banks. One of the ideas that is floating behind the scenes is to convince Congress to strike a middle ground for the global low intangible tax income (GILTI).
President Joe Biden has proposed spending more than $ 2 trillion on repairing and upgrading American infrastructure, including roads, bridges, ports, and green energy technology. Read more about CNBC’s infrastructure coverage here:
According to the Tax Policy Center, GILTI is the “income that foreign subsidiaries of US companies earn from intangible assets such as patents, trademarks and copyrights.” GILTI’s minimum tax is 10.5%. Biden wants to increase the minimum rate to 21%.
Other companies have told their lobbyists to convince moderate Democrats in Congress to support a corporate tax rate of 25% instead of 28%. Democratic Senator Joe Manchin, who represents GOP-friendly West Virginia and is a key swing vote in the evenly split Senate, has called for the corporate rate to be raised to around 25% instead of 28%.
A lobbyist told CNBC that some of its customers were apparently split over whether to roll back the tax hike proposal because the American company had long been hoping for a massive infrastructure bill.
“I think they’re everywhere because I think a lot of money is being spent in ways that are attractive to many companies,” another corporate lobbyist told CNBC. “If your into broadband electric vehicles go down the list, there are a lot of positive issues that the American company will like.” This lobbyist represents auto and airline giants as well as large private equity firms.
“On the other hand, nobody likes a corporate tax hike,” added this lobbyist.
Other lobbyists said their clients would turn to corporate interest groups like the Chamber of Commerce, the Business Roundtable and the RATE Coalition.
The RATE Coalition lists a number of corporate giants as members on its website, including FedEx, Capital One, Altria, Lockheed Martin, and Toyota. The group advocates keeping the corporate tax rate at 21%. A person familiar with the matter told CNBC that the group was “willing to spend what it needs” against Biden’s proposal for a corporate tax rate.
Former Senator Blanche Lincoln, D-Ark., A RATE leader, pushed back Biden’s proposed new corporate set and urged Congress and administration to focus instead on closing tax loopholes.
“I urge my former congressional colleagues and friends in administration to fill the gaps that allow profitable companies to pay little or no taxes,” she told CNBC.
FedEx later told CNBC that while they were in favor of hikes in gas and diesel taxes, they opposed raising the corporate tax rate to fund infrastructure reform.
“FedEx supports federal infrastructure investments by increasing gasoline and diesel taxes as well as, in the future, user-related fees for the system’s beneficiaries,” Isabel Rollison, a company spokeswoman, told CNBC. “”We don’t believe that raising the corporate tax rate and broadening the base is the right strategy for funding infrastructure, as such changes will hurt the country’s economic competitiveness and have a more adverse impact on US GDP. ”
The Chamber of Commerce and the Business Roundtable also publicly criticized the idea of raising the corporate tariff. This is because many other outside groups were preparing for an all-out war against Biden’s tax concepts.
A company agency that refused to be named because it was still in the campaign planning phase was already in the process of making TV ad purchases, some of which will drive down Biden’s corporate tax rate.
The fossil fuel industry is included in the Biden Plan. The government said it would fund some of the spending by eliminating tax credits and subsidies to fossil fuel producers.
The American Petroleum Institute, the oil and gas industry’s largest trading group, opposes the use of taxes to pay for the plan.
“Targeting certain industries with new taxes would only undermine the country’s economic recovery and put well-paying jobs, including union jobs, at risk,” said Frank Macchiarola, API senior vice president of policy and regulation. “It is important to note that our industry does not receive any special tax treatment, and we will continue to advocate tax legislation that promotes a level playing field for all sectors of the economy and measures that sustain the billions of dollars in government revenues we generate and increase. ” help generate. “
API has dozens of members including energy giants like Chevron, BP, and Shell.
API previously endorsed a price on CO2 emissions to warm the planet, which is a big shift after long resisting regulatory action on climate change.