Biden starts selling major corporate tax hikes while opening the door to a compromise with Republicans

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Joseph Zeballos-Roig,Ayelet Sheffey
·3 min read
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President Joe Biden and Janet Yellen White House.JPG
President Joe Biden meets with Treasury Secretary Janet Yellen in the Oval Office at the White House in Washington, January 29, 2021. Kevin Lamarque/Reuters
  • The Biden administration released a sales pitch for its proposed corporate tax hikes.

  • They project raising $2.5 trillion over 15 years to finance the entire proposed infrastructure package.

  • Biden said he is willing to hear ideas from the GOP on infrastructure, opening the door to possible compromise.

  • See more stories on Insider's business page.

The Biden administration unveiled a proposal for a series of corporate tax hikes on Wednesday, projecting they would raise $2.5 trillion over 15 years to cover all of their infrastructure spending. Soon afterward, President Joe Biden signaled an openness to compromise with Republicans on the size of a corporate tax increase.

"I'm wide open, but we got to pay for this," Biden said. "I am willing to negotiate that."

Hours earlier, the Treasury Department released a 19-page plan designed to be a sales pitch as the White House moves to garner support from Congress for its infrastructure plan released last week. Major parts include:

  • Raising the corporate tax rate from 21% to 28%.

  • Establishing a global minimum tax for multinational corporations.

  • Setting a minimum tax for companies that pay no federal taxes, but publicly report income to shareholders.

  • Shoring up tax enforcement at home.

  • Ending profit offshoring and encourage companies to keep their money in the US.

  • Replacing fossil fuel subsidies with clean energy incentives.

These changes would substantially increase the sum of federal taxes that corporations owe every year, according to the Biden administration. It also amounts to a partial reversal of President Donald Trump's 2017 tax law, which slashed the corporate tax rate from 35% to 21%.

"Importantly, this tax plan would generate new funding to pay for a sustained increase in investments in infrastructure, research, and support for manufacturing, fully paying for the investments in the American Jobs Plan over a 15-year period and continuing to generate revenue on a permanent basis," the report said.

Among other measures, scrapping the subsidies for oil and gas companies would generate $35 billion over the next decade, per Treasury, although Biden's plan would refashion them into clean energy tax incentives instead of eliminate them.

Another report released on Wednesday by the nonpartisan Penn Wharton Budget Model estimated that in a 10-year budget window from 2022-2031, Biden's "American Jobs Plan" would spend $2.7 trillion and raise $2.1 trillion in revenue.

Influential business groups such as the Business Roundtable and the Chamber of Commerce have already come out in opposition to the president's plan. They argue that it would reduce the nation's economic competitiveness abroad and harm job creation at home as the US recovers from the pandemic.

Still, some business leaders are coming out in favor of business tax hikes. Amazon's CEO Jeff Bezos released a statement on Tuesday saying he supports a corporate tax hike, though he didn't specify what level. In addition, Lyft President John Zimmer said he backed Biden's proposed 28% corporate tax hike in a CNN interview on Wednesday.

Biden's $2 trillion infrastructure package faces significant obstacles in Congress. Republicans are united in strong opposition to the plan, fiercely criticizing its tax increases. Some Senate Democrats are also reluctant to throw their support behind it.

Read the original article on Business Insider