President Joe Biden has suggested the idea of a minimum 15% tax on US companies and increased enforcement efforts by the IRS to Republicans as a way to fund a bipartisan infrastructure package.
The proposal sets aside the Biden administration’s proposal to increase the corporate income quota from 21% to 28% – a non-starter for Republican lawmakers – although this could be pursued elsewhere. White House press secretary Jen Psaki confirmed the offer at a briefing on Thursday.
Rep. James Clyburn says time is running out to finalize an infrastructure contract.
Under the pitch for the Republicans, companies that have lots of tax credits and withholding would have to pay at least 15%. The plan would also increase tax revenues by conducting more audits on rich taxpayers.
These two financing measures were already included in Biden’s tax plans. The White House sees the offer as raising money without raising tax rates or withdrawing President Donald Trump’s 2017 tax cuts, which Republicans have called a red line in the negotiations. The Washington Post previously reported on the proposal in a bid for $ 1 trillion in spending.
Biden met with Senator Shelley Moore Capito, the West Virginia Republican who leads infrastructure talks for the GOP, on Wednesday in the latest attempt at compromise. The discussion did not result in an agreement on how much to spend or pay, but the two are due to speak again on Friday. Kelley Moore, a spokeswoman for Capito, declined to comment.
Biden had previously made a $ 1.7 trillion infrastructure proposal to the Republicans. Removing a 28% increase in corporate income tax from the table for these discussions would eliminate Treasury Department revenue to $ 857.8 billion over a decade.
The Internal Revenue Service enforcement plan, which is expected to raise $ 778.8 billion, along with the $ 148.3 billion from the 15% minimum tax, would offset a total of about $ 927.1 billion in infrastructure spending, based on Treasury Department estimates released last week.
The Democrats could pursue different tax plans in a law to reconcile the parties later this year.
Stressed that the 15% corporate income tax was included in Biden’s American Jobs Plan and proposed budget, Psaki said the president was “absolutely not” giving up efforts to raise the corporate tax rate to 28%. She described the latest offer as an attempt to find a way forward in this particular negotiation with the Republicans.
“This is one way for him to identify pieces that he has long been a proponent of,” said Psaki. “That should be perfectly acceptable to Republicans who want to leave the 2017 tax law intact,” she said.
Biden is also open to reallocating around $ 75 billion in funds left over from coronavirus relief laws passed in 2020, Psaki said.
Also on Thursday, the No. 3 Democrat in the House said that time may be running out to reach a bipartisan agreement on a national infrastructure plan, suggesting Biden and the Democrats in Congress should prepare to act independently.
“We’re still negotiating,” said South Carolina representative Jim Clyburn during an appearance on Bloomberg Television’s “Balance of Power”. But he added, “I don’t think we should take the risk of not doing something because the other side isn’t cooperating.”
But progressive Democrats have expressed dismay at reports that negotiations may be heading towards what they consider to be an unacceptable compromise. “If what we’ve read is true, I would find it very difficult to endorse this bill. Two trillion dollars was already the compromise. President Biden can’t expect us to vote for an infrastructure deal dictated by the Republican Party, ”New York City Congressman Jamaal Bowman, a new member of Congress, said in a statement.
The 15% minimum tax is targeted at situations where large tech companies like Amazon.com Inc., Netflix Inc., and Zoom Video Communications Inc. were largely able to avoid paying federal income taxes despite making a profit in a few years by using legal maneuvers , including depreciation on business expenses to reduce their tax bill.
The measure was incorporated into Biden’s American Jobs plan announced in March. It would impose a tax of at least 15% on company profits, also known as book revenues, reported in their financial statements. The change would undo decades of differences in how companies calculate their finances for tax purposes and limit the amount of statutory tax breaks that companies could take advantage of.
The rule has been criticized by Republicans and some economists as an inefficient way to raise taxes. Critics say that introducing a minimum profit tax would mean companies would have less incentive to spend money on things Congress wants to promote, like research and development or renewable energy, as they would not be able to take advantage of those tax breaks.
Biden has also proposed a $ 80 billion investment in the IRS that the White House says could raise another $ 700 billion in a decade. The plan would speed up enforcement by the IRS, which has declined in recent years, and give the IRS more insight into some taxpayers’ bank accounts.
The White House has argued that the additional enforcement is supported by both parties. A Data for Progress report published last month found that 60% of Americans – including 40% of Republicans – support increased enforcement of the IRS.
Republican lawmakers have said they are backing additional funding for exams, but some have criticized the Biden plan for going too far.
– With support from Nancy Cook and Jennifer Epstein
(Updates with Bowman instruction in paragraph 14.)
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