President Joe Biden launched a full-throated defense of his corporate tax hike to fund his $2.3 trillion dollar infrastructure plan, saying he was tired of ordinary Americans being fleeced.
Biden pointed to the numerous companies that don’t pay taxes, the Trump tax cuts that benefited top wage earners, and the amount of money billionaires made during the K-shaped economic recovery.
‘I’m not trying to punish anybody, but damn it, maybe it’s because I come from middle class neighborhood, I’m sick and tired of ordinary people being fleeced,’ he said.
Biden’s tax proposal would hike the corporate tax rate to 28 per cent, increase the de facto global minimum tax and crack down on companies that pay little or no income taxes with their ‘book value.’
The Chamber of Commerce and the Business Roundtable have pushed back against Biden’s tax hikes, claiming they will crush American competitiveness – an argument Republicans and some moderate Democrats have echoed.
After his remarks, Biden told reporters he is open to changing the 28 per cent tax rate.
‘I’m willing to listen to that. I’m willing. I’m wide open to but we got to pay for this. We got to pay. There’s many other ways we can do it, but I’m willing to negotiate that. I’ve come forward the best, most rational way in my view, the fairest way to pay for it. But there are many other ways as well,’ he said.
President Joe Biden launched a full-throated defense of his corporate tax hike to fund his $2.3 trillion dollar infrastructure plan
The long list of items in Biden’s infrastructure proposal and his tax plan to raise the trillions needed to pay for his wish list have become a dueling set of controversies for the administration as it struggles to get enough support on Capitol Hill to pass the package.
Biden said in his speech he welcomes the debate and that ‘compromises are inevitable.’ He noted he and Vice President Kamala Harris will meet with Republicans and Democrats over the next few weeks to discuss the issue.
‘We’ll be open to good ideas and good faith negotiations,’ he said. ‘But here’s what we won’t be open to, we will not be open to doing nothing, and inaction is simply is not an option.’
Republicans have criticized the president’s plan for containing items outside the scope of traditional infrastructure. Biden’s plan spends billions on roads, bridges and highways but it also funds additional projects such as broadband internet across the nation, affordable housing, improvements to schools and day care centers, and a Civilian Climate Corps.
But Biden argued infrastructure has to evolve to meet the changing needs of society.
‘To automatically say that the only thing that’s infrastructure is a highway, bridge, or whatever, that’s just not rational,’ he said.
‘We need to start seeing infrastructures through its effect on the lives of working people in America,’ he noted.
He said working Americans need dependable internet, an electric grid that won’t collapse in a winter storm, clean pipes for clean drinking water, and local investment, including in minority communities.
Biden grew visibly angry at points in his remarks, when he talked about America falling behind the rest of the world when it came to investment and innovation. He particularly singled out China as bypassing the United States.
‘Over the next six to eight months, China and the rest of the world is racing ahead of us and the investments they have in the future,’ he said.
‘America is no longer leading the world because we’re not investing,’ he said.
‘I don’t know why we don’t get this,’ Biden added, his voice getting louder as he spoke. ‘We’re one of the only a few major economies in the world whose public investment in research and development has declined as a percentage of GDP in the last 25 years. Declined. The United States of America that led the world.’
‘We stop investing in research, we stop investing in the jobs of the future. And we give up leading the world,’ he argued.
President Joe Biden said without more investment the United States would fall behind countries like China
His speech comes as his Treasury Department unveiled its plan to overhaul the corporate tax code, which, if enacted, would raise $2.5 trillion in revenue over 15 years to pay for the infrastructure package.
Biden’s push to pay for the package includes:
Hike the corporate tax rate
Biden would raise the corporate tax rate in the US to 28 percent from 21 percent. This move would partially undo the Trump administration’s cut of the corporate tax rate from 35 percent in its 2017 tax bill.
The White House argues this would bring the United States in line with other first world nations when it comes to a tax on businesses.
Double the de facto global minimum tax
Biden’s plan would double the de facto global minimum tax to 21 percent. It would also toughen its requirements so companies would have to pay the tax on a wider span of income across countries.
Raise global corporate income tax
Additionally, American officials are working with the G20 nations to enact a minimum global corporate income tax as part of the administration’s effort to offset any disadvantages from their plan to increase the U.S. corporate tax rate.
Treasury Secretary Janet Yellen on Monday urged the move, saying it would ‘stop the race to the bottom.’
‘Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,’ Yellen noted. ‘It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods.’
The U.S. is involved in talks with about 140 nations to develop a global agreement on minimum levies, led by the Organization for Economic Cooperation and Development, but participants haven’t yet reached a deal.
Enact a book value income tax
The plan would enact a 15 percent minimum tax on book income of large companies that report high profits, but have little taxable income.
Book income is what businesses report to investors and which is often used to judge shareholder and executive payouts.
The tax – aimed at companies that report large profits to investors but low tax payments would apply only to companies with income exceeding $2 billion. That is up from the $100 million threshold that Biden advocated for in the campaign.
The result is that just 180 companies would even meet the income threshold and just 45 would pay the tax, The Wall Street Journal noted.
Finally, the plan would replace flawed incentives that reward excess profits from intangible assets with more generous incentives for new research and development; replace fossil fuel subsidies with incentives for clean energy production and ramp up enforcement to address corporate tax avoidance.
Biden would also boost the Internal Revenue Service’s budget so that it can step up enforcement and tax collection efforts.
The administration has begun its push to defend it tax proposal and argue its long list of items in the infrastructure bill are needed to keep the country competitive.
Commerce Secretary Gina Raimondo joined the daily White House press briefing on Wednesday to argue ‘the fact of the matter is the corporate structure, today is broken.’
‘Many, many companies – large profitable companies – pay no corporate taxes. So I’d like to think we can all agree that it needs to be improved, level the playing field, close the loopholes and have a have a discussion around how we do this together to improve competitiveness,’ she said.
She dismissed criticism that the plan would kill American jobs.
‘We must make these investments in infrastructure in order to compete,’ she said.
Meanwhile, Senate Republican Leader Mitch McConnell has referred to Biden’s plan as a ‘Trojan Horse’ for issues Democrats want to advance. Other Republicans have argued a stream-lined, traditional infrastructure package could pass with bipartisan support.
Commerce Secretary Gina Raimondo said the current corporate tax structure is ‘broken’ and needs to be fixed
And Republican Senator Roy Blunt of Missouri said he told the White House if they want bipartisan support on an infrastructure plan, it needs to have just infrastructure.
‘I think it’s a big mistake for the administration. They know I think it’s a mistake,’ Blunt said on ‘Fox News Sunday.’ ‘And I also think it would be an easy victory if we go back and look at roads and bridges and ports and airports and maybe even underground water systems and broadband. You’d still be talking about less than 30 percent of this entire package and it’s an easily doable 30 percent.’
‘The other 70 or so percent of the package that doesn’t have very much too do with infrastructure,’ he noted on ABC’s ‘This Week.’
A CNN analysis found that traditional infrastructure projects account for 30 per cent of Biden’s plan.
Biden’s plan includes $621 billion for transportation, $400 billion for homecare service, $300 billion for manufacturing and $180 billion for research and development, according to a White House Fact Sheet.
Here’s a more detailed breakdown of what it contains:
- $115 billion to modernize the bridges, highways, roads, and main streets that are in most critical need of repair – including 20,000 miles of highway and 10,000 small bridges
- $20 billion to improve road safety for all users
- $85 billion to modernize existing transit and help agencies expand their systems to meet rider demand
- $80 billion for Amtrak repairs
- $174 billion investment in electric vehicles
- $25 billion in our airports
- $50 billion to safeguard critical infrastructure
- $17 billion in inland waterways, coastal ports, land ports of entry, and ferries
- $111 billion to replace lead pipes and service lines and to modernize drinking water and sewer systems
- $100 billion to protect nature-based infrastructure – lands, forests, wetlands, watersheds, and coastal and ocean resource; to build up electrical system; expand tax credits for clean energy generation and storage; plug orphan oil wells and mines; and redevelop Superfund sites
- $40 billion to improve the infrastructure of the public housing system in America
- $100 billion to upgrade and build new public schools
- $12 billion for community colleges
- $25 billion to help upgrade child care facilities
- $10 billion in the modernization, sustainability, and resilience of federal buildings
- $400 billion toward expanding access to quality, affordable home- or community-based care for aging relatives and people with disabilities
- $35 billion investment in climate science
- $10 billion for a new Civilian Climate Corps
- $100 billion in workforce development programs, including a call for Congress to ensure all workers have a free and fair choice to join a union by passing the Protecting the Right to Organize (PRO) Act
- $300 billion for manufacturing
- $180 billion for research and development