President Joe Biden talks to reporters on the South Lawn of the White House, Washington, U.S. March 14, 2021.
President Joe Biden said Monday he is not concerned that a proposal to boost corporate America's tax bill would dampen the economy as it emerges from the Covid-19 pandemic.
When asked whether he is concerned that the US move to raise the corporate rate to 28% could harm an already fragile recovery, Biden replied not at all.
The President said from the South Lawn of the White House there is no evidence of this. Here you have 51 or 52 companies in the Fortune 500 that have n't paid a penny in taxes for three years.
The proposed increase of the corporate rate is part of the administration's effort to fund its$ 2 trillion infrastructure proposal, a plan many Democrats have promised to pass during the 2020 election cycle.
While politicians on both sides of the aisle agree that American roads and bridges are in need of extensive repair, fierce disagreements remain over other priorities and the ultimate size of the bill.
Biden and progressive Democrats favor a raft of spending, including$ 621 billion in transportation infrastructure,$ 400 billion to care for the elderly and disabled Americans,$ 300 billion for improving drinking water and broadband access and another$ 300 billion in building and retrofitting affordable housing.
Republicans, who supported president Biden's$ 1.9 trillion covid-19 relief package last month, say the President should repeal the current legislation and almost unanimously oppose edits to the tax cuts passed by former President Donald Trump.
Trump's 2017 tax cuts, widely viewed as his landmark legislative victory, lowered the corporate tax rate to 21% from 35%, which at the time was one of the highest rates among developed economies. If Biden's infrastructure plan would partially reverse Trump's plan by increasing the rate to 28%, that will be bad for him.
Republicans worry that the increase of the corporate rate so soon after reducing it would make the U.S. a less attractive option to businesses considering where to locate new factories, jobs and profits.
For much of the past 30 years, U.S. corporations have tried to save on taxes by reintroducing in Ireland, Cayman Islands, Bermuda and other offshore tax havens where corporate rates are lower.
Even the conservative democrat Joe Manchin from West Virginia reportedly said Monday that he opposes the White House plan if it raises corporate taxes to 28%.
Manchin, who is regularly a key swing voter in a Senate split 50-50, could doom the infrastructure bill if Democrats opt to push the measure through Congress through budget reconciliation.
Amid these concerns, Treasury Secretary Janet Yellen is leading an effort to encourage other nations to institute a minimum tax levy on corporations in order to ensure that no one nation gains a competitive advantage.
We are working with G-20 nations to agree on a global minimum corporate tax rate that can curb the race to the bottom, Yellen told the Chicago Council on Global Affairs on Monday in prepared remarks. Together, we can use a global minimum tax to ensure that the multinational economy thrives based on a more equal playing field in the taxation of global corporations and promotes innovation, growth and prosperity.
As of Monday afternoon it was unclear whether Yellen had heard Manchin's plan before his comments. The Biden plan would also increase the offshore profit tax rate from 21% to 10.5%, up from the 10.5% rate in the Trump era.