President Joe Biden proposed to Republicans the idea of a 15% minimum corporate tax in the United States, along with enhanced IRS enforcement efforts, as a way to fund a bipartisan infrastructure package.
The proposal sets aside the Biden administration’s proposal to increase the overall corporate income rate to 28%, from 21% – a failure for Republican lawmakers – although this could be continued elsewhere. White House press secretary Jen Psaki confirmed the offer during a briefing Thursday.
Under the rhetoric of the Republicans, companies that have a lot of tax credits and deductions would be required to pay at least 15 percent. The plan would also increase tax revenues by carrying out more audits of wealthy taxpayers.
Both of these financing measures were already included in Biden’s tax plans. The White House sees the offer as raising funds without raising tax rates or canceling President Donald Trump’s 2017 tax cuts, which Republicans say is a red line in the negotiations. The Washington Post earlier reported on the proposal as part of a $ 1,000 billion spending offer.
Biden met with Senator Shelley Moore Capito, the West Virginia Republican leading infrastructure talks for the GOP on Wednesday, in the latest compromise attempt. The discussion did not result in an agreement on how much to spend or how to pay it, but the two are expected to speak again on Friday. Capito spokesperson Kelley Moore declined to comment.
Biden had previously made a $ 1.7 trillion infrastructure proposal to Republicans. Removing a 28 percent increase in the corporate tax rate from the table for these talks would wipe out what the Treasury Department estimates at $ 857.8 billion in revenue over a decade.
The IRS enforcement plan, which is expected to raise $ 778.8 billion, combined with the $ 148.3 billion in 15 percent minimum tax, would collectively offset about $ 927.1 billion in spending. infrastructure, based on Treasury estimates released last week.
Democrats could still pursue other tax plans in a partisan reconciliation bill later this year.
Psaki stressed that the 15 percent profit tax was included in Biden’s proposed U.S. jobs plan and budget, and said the president was “absolutely not” abandoning efforts to increase the corporate rate at 28 percent. She called the latest offer an attempt to find a way forward on this specific negotiation with the Republicans.
“It’s a way for him to identify pieces that he has long been a supporter of,” Psaki said. “This should be totally acceptable” for Republicans who want to leave the 2017 tax law intact, she said.
Biden is also ready to reallocate some $ 75 billion of funds left over from coronavirus relief bills passed in 2020, Psaki said.
Also on Thursday, the No.3 House Democrat said time might be running out to reach a bipartisan deal on a national infrastructure plan, suggesting that Biden and the Democrats in Congress should prepare to act on their own.
“We are still negotiating,” said Rep. Jim Clyburn of South Carolina during an appearance on Bloomberg Television’s “Balance of Power” program. But, he added, “I don’t think we should run the risk of not doing something because the other side is not cooperating.”
The 15 percent minimum tax relates to situations in which large tech companies, such as Amazon.com Inc, Netflix Inc., and Zoom Video Communications Inc., have largely been able to avoid paying federal income taxes in certain years despite the profit making because they used maneuvers, including business expense write-offs, to lower their tax bill.
The measure was included in the US plan to employ Biden announced in March. It would impose a minimum 15 percent levy on corporate profits reported in financial statements, also known as accounting income. The change would upset decades of differences in the way businesses calculate their finances for tax purposes and limit the amount of legal tax breaks businesses could use.
The provision has been criticized by Republicans and some economists for being an ineffective way to raise taxes. Critics said imposing a minimum profit tax would mean companies would have less incentive to spend money on things Congress wants to promote, such as R&D or renewables, because they couldn’t claim to these tax breaks.
Biden also proposed an $ 80 billion investment in the Internal Revenue Service, which the White House says could raise an additional $ 700 billion over a decade. The plan would speed up enforcement of the IRS, which has declined in recent years, and give the IRS more visibility into some taxpayer’s bank accounts.
The White House has argued that the additional app enjoys bipartisan support. A Data for Progress report released last month showed that 60 percent of Americans – including 40 percent of Republicans – supported increased enforcement of the IRS.
Republican lawmakers have said they support additional funding for audits, but some criticized the Biden plan for going too far.