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Expectations refer to a modest increase in corporate tax rates to 25%

Image: President Joe Biden, Vice President Kamala Harris, Senator Chuck Schumer, Speaker Nancy Pelosi, March 12, 2021. Source: Official photo of the White House by Adam Schultz.

Jarrett Renshaw

(Reuters)-President Joe Biden supported raising the U.S. corporate tax rate from 21% to 28% as the primary way to fund a $ 2 trillion infrastructure program, including within the White House. For a few people in Washington, the tax rate actually lands there.

Biden said Wednesday that he could compromise after asking reporters if they agreed to a tax rate of less than 28%.

“I’m happy to hear that, I accept it widely,” Biden said.

Reuters interviewed more than 12 companies and White House officials involved in driving infrastructure. Most people expect the White House and business groups to compromise on a corporate tax rate of 25%-a level that neither side has chosen, but both can live together.

“We don’t like it, but we expect it to be 25 percent,” said lobbyist, a top US energy company, demanding anonymity. “If so, we think it’s a victory.”

U.S. corporate tax rates have fallen from 35% to 21% after a 2017 tax cut pushed by former President Donald Trump and his fellow Republicans, but many large U.S. companies have much less. I’m paying. Increasing the amount companies pay for federal budgets in excess of $ 4 trillion is an important part of Democratic Biden’s plans to reduce inequality and rebuild the US economy in an attempt to counter the rise of China.

US multinationals such as Alphabet Inc’s Google, Facebook Inc, and Merck & Co are among the best at tax cuts, tax and legal experts say.

Amazon.com Inc is backing a corporate tax hike here as part of an infrastructure review, Jeff Bezos, chief executive officer of the largest retailer in the United States, said Tuesday. Biden said last week that Amazon was one of 91 Fortune 500 companies that “uses various loopholes that don’t pay a penny on federal income tax,” in contrast to middle-class families who pay a tax rate of 20% or more. Said that.

Biden’s infrastructure and investment packages include roads and bridges, affordable housing and long-term care workers.

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In addition to raising corporate tax rates, the White House is pushing up US and global minimum taxes on businesses and strengthening tax law enforcement, Treasury Secretary Janet Yellen said Wednesday.

Opposition

Industry groups, including the US Chamber of Commerce and West Virginia Democrat Joe Manchin, who is moderate on some issues, said the 28% rate was too high. But support for a bill passed in the 50-50 Senate is essential, Manchin said, saying he could support a 25% rate.

The White House knew that proposing a raise to 28% would face opposition, including some Democrats. Ready to discuss alternatives-three government officials familiar with the discussion told Reuters, including setting the rate at 25%.

Unlike the Coronavirus Pandemic Relief Bill, which was passed by Congress in mid-March and signed by Biden in mid-March, when the expiration of unemployment benefits created a sense of urgency, the White House believes that it can discuss infrastructure plans, I hope it will play a more important role.

In 2013, then Vice President Biden and President Barack Obama proposed reducing the corporate tax rate from 35% to 25%, but Congressional Republicans blocked the plan here. So far, Republicans haven’t supported a corporate tax hike and have criticized the plan for being too big.

“Discussion is welcome. Compromises are inevitable. Mr Biden said in a speech at the White House on Wednesday. He immediately invited Republicans to the White House, and the administration said,” Good ideas and sincere negotiations. It’s open to the public. “

Raising the corporate tax rate from 21% to 28% is expected to generate a significant portion of Biden’s proposal of $ 850 billion, according to the nonprofit committee of the responsible federal budget public policy organization.

According to the commission, 25% generated just under $ 500 billion, forcing Democrats to look for additional sources of income or cut spending.

That effort is further complicated by Biden’s campaign promise not to raise taxes on Americans with incomes of less than $ 400,000, making items such as raising gasoline taxes and setting taxes per mile politically toxic. Become.

“It’s a very difficult tax pledge and promise,” said Commission Chairman Maya McGuineas.

Report by Jarrett Renshaw; edited by Heather Timmons and Grant McCool.

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Source: Reuters

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