Biden ditches a corporate tax rate increase in his bipartisan infrastructure deal - for now
A group of Republican and Democratic senators struck a bipartisan infrastructure deal on Thursday.
President Joe Biden threw his support behind the framework, which omits several of his proposals.
One measure that didn't make it in: An increase in taxes on companies to offset spending.
An increase to the corporate tax rate didn't make it into the latest iteration of the infrastructure package - signaling a major compromise on the part of President Joe Biden.
On Thursday, Biden threw his support behind the bipartisan framework for a $1 trillion deal, which represented a major step forward amidst ongoing infrastructure negotiations, but left behind a tax hike on businesses in lieu of other pay-fors and spending offset. Biden had proposed hiking the corporate tax rate from 21% to 28%, after the rate had been slashed from 35% in Trump's 2017 tax law. Senate Minority Leader Mitch McConnell has called that 2017 tax law a red line for the GOP, which should remain untouched.
Instead, a document outlining the bipartisan deal lists reducing the tax gap - the gap between taxes owed and collected - as one potential way to offset spending. That echoes rhetoric presented in the American Families Plan, which would allocate funding towards IRS enforcement to crack down on wealthy tax evaders.
Sen. Mark Warner (D-Va.), part of the bipartisan group, told reporters that "there's lot of evidence that if you invest more in the IRS, it's going to pay a huge dividend." He cited an estimate from IRS Commissioner Charles Rettig that the tax gap could be in the ballpark of $1 trillion a year.
A $40 billion investment in the IRS, Warner said, could bring in a gross of $100 billion, meaning a net of around $60 billion that could fund spending.
In remarks following the deal's announcement, Biden said he looked forward to receiving the bipartisan physical infrastructure deal, as well as a "human infrastructure" bill that will likely just garner party-line support.
"We're going to have to do that through the budget process, and we need a fair tax system to pay for it all," Biden said, referring to the reconciliation process that will be needed to pass the human infrastructure bill. "I'm not going to rest until both get to my desk."
Read the original article on Business Insider