Cracks have reportedly formed one of the Congressional Democrats debating how to raise the taxes needed to finance President Joe Biden’s $2.25 trillion infrastructure program.
reported on Wednesday.
Biden wants to cover the program over 15 years by increasing the corporate tax rate from 21% to 28%, and raising taxes on U.S. companies’ foreign earnings.
With Republicans signaling combined resistance to Biden’s proposal, which was announced last week, Democrats need near-universal party service to pass infrastructure and occupations legislation. Reaching consensus on taxes will be among the top challenges.
Republicans oppose lowering the corporate tax rate, which was reduced from 35% to 21% under former President Donald Trump’s 2017 tax cut legislation. Democrats generally assert the rate is too low.
Democrats are likely to again use the reconciliation process to pass an infrastructure package with a simple majority vote in the Senate, thus avoiding a filibuster.
Not all Democrats agree with the 28% rate, however. Sen. Joe Manchin, D-W. Va., whose support will be necessary at a Senate that is split evenly along party lines — with Vice President Kamala Harris as the tie-breaking vote — said Monday he’d prefer a smaller increase, to 25%.
On Monday, White House press secretary Jen Psaki said Biden called for raising the corporate tax rate to 28% because he”felt it was responsible to propose a way to pay for his proposal.”
Psaki said the administration expected to talk with lawmakers how to fund the package and Treasury Secretary Janet Yellen held a briefing with House Democrats on Tuesday.
“There will be different ideas for tax proposals,” Psaki said. “That will all need to be weighed by a range of questions, including — with Congress and with leaders in Congress and outspoken members in Congress — about whether it should be paid for, over what period of time, how much should be paid for, what the options are for paying for it.”
Many Democrats have expressed support for raising the corporate tax rate.
Rep. Don Beyer, D-Va., chairman of the Joint Economic Committee, said 28% was”a prudent compromise” that”moderates and progressives would be wise to support.”
He disagreed with Republicans who assert U.S. businesses can’t compete globally at the rate.
“The rate was significantly higher from the post-WWII era until 2017, a timespan which included some of the most prosperous periods for the U.S. economy,” Beyer, also a member of the tax-writing Ways and Means Committee, said in an email.
Rep. Earl Blumenauer, D-Ore., after a proponent of increasing the gasoline tax to pay for infrastructure, told The Hill that increasing the corporate tax rate is a better option.
“The gas tax is fast declining in its effectiveness and opposition is increasing,” he said in a statement Tuesday. “Using other sources, like adjusting the corporate tax rate, have greater promise of being enacted, restoring tax fairness, and generating the significant amount of money that is necessary to meet the needs of the American people.”
Three Democrats on the Senate Finance Committee proposed changes to increasing taxes on multinational corporations which differed in some ways from [the] Biden” plan. 1 example is that the Democrats’ call for changing global provisions in Trump’s tax legislation as opposed to scrapping the provisions entirely, as Biden suggested.
Senate Finance Committee Chairman Ron Wyden, D-Ore., Innovative Sen. Sherrod Brown, D-Ohio, and centrist Sen. Mark Warner, D-Va., said their proposal was aimed at Obtaining full Democrat support.
“This is about getting all 50 Senate Democrats on board,” Wyden said on a call with reporters Monday.
Biden proposed his infrastructure bundle for a follow-up to a $1.9 trillion coronavirus relief package signed into law last month.
Some Democrats disagree with Biden’s plan for different reasons.
Progressives do not think Biden’s plan goes far enough. Democrats from high-tax states, meanwhile, want to reverse the $10,000 cap on the state and local taxation — also known as SALT — deduction imposed by Trump’s 2017 law.