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President Joe Biden may not achieve his proposed corporate tax rise to 28%, but lawmakers and corporations could agree on a 25% rate as a compromise, White House officials and business groups told Reuters.
The US corporate tax rate is 21%, but Biden wants to raise it to help fund his $2 trillion infrastructure plan. He defended his 28% rate proposal on Wednesday, saying he was “sick and tired of ordinary people being fleeced” while large firms paid little or no income tax — but added that he was “wide open” to negotiating a lower rate.
Reuters spoke to more than a dozen corporate and White House officials involved in the push for the infrastructure plan, and most said they expected Biden and business groups to agree on a tax rate of 25%. This would bridge the gap between industry leaders, who generally oppose a tax hike, and Democrat lawmakers, who are overwhelmingly in favor of the 28% rate.
“We don’t like it, but we expect to be at 25%,” a lobbyist at an unnamed top US energy firm told Reuters. “If so, we are going to consider that a win.”
The White House was open to discussing alternative tax measures, including setting the corporate tax rate at 25%, three administration officials familiar with the discussions told Reuters.
Sen. Joe Manchin of West Virginia, a Democrat, has spoken out against the 28% tax rate, saying that he favored a 25% rate instead, Insider’s Juliana Kaplan reported on Monday. Without his support, the bill wouldn’t pass in a 50-50 Senate.
Amazon CEO Jeff Bezos has already said he supports the infrastructure plan – including the corporate tax hike. This made Amazon, the US’ largest company, the first major corporation to voice its support for the plan.
Some business groups have spoken out against the proposal. The Business Roundtable, which represents the CEOs of major US firms, said it “strongly opposes corporate tax increases.” It said raising tax would create “new barriers to job creation and economic growth.”
Biden announced the $2 trillion American Jobs Plan on March 31 — the first of a two-part infrastructure program aimed at overhauling the US economy. The package includes investments in transportation, water, broadband, power, housing, and education. He wants the spending to take place over eight years.
As well as raising the corporate tax to 28%, the package also proposes a 21% global minimum corporate income tax, tax credits for companies that move jobs onshore, and more resources for the IRS. The tax hikes are designed to completely offset the $2 trillion cost of the package over 15 years.
A recent Morning Consult/Politico poll found that Democrats were more than twice as likely than Republicans to support infrastructure spending financed through tax hikes on the wealthy and corporations.
Overall, Americans are more in favor of increasing taxes on the rich than on corporations, the poll found.