Corporate Tax

Firms embrace the Biden infrastructure plan and oppose corporate tax will increase

Joe Biden

Photographer: Jim Lo Scalzo / EPA / Bloomberg

Photographer: Jim Lo Scalzo / EPA / Bloomberg

U.S. corporate groups are thrilled that President Joe Biden is proposing massive new investments to improve crumbling U.S. infrastructure, but they will oppose a corporate tax rate hike to pay for it.

The U.S. Chamber of Commerce, Business Roundtable, and other business lobbies strongly oppose raising the corporate tax rate from 21% to 28% to pay for the $ 2.25 trillion infrastructure plan presented by Biden on Wednesday. You want a usage fee model to raise money for improvements.

“We strongly oppose the government’s proposed general tax increases that will slow economic recovery and make the US less competitive globally – the opposite of what the Infrastructure Plan aims to achieve,” said Neil Bradley, executive vice president and chief policy officer of the US Chamber said in a statement.

The chamber plans to have its member firms work directly with lawmakers to provide real-world examples of what an increase in the corporate tax rate would mean for their companies, such as opening a new manufacturing facility, according to a person familiar with the chamber plans.

In a speech in Pittsburgh on Wednesday, Biden said he hopes and believes a number of Republicans and corporations will support his plan and that while he has set out his ideas for the pay, he is open to other suggestions – and for so long They do not levy taxes on those who earn less than $ 400,000 per year.

“If anyone has any additional ideas, please let them get in touch,” said Biden. “I’m open to other ideas.”

The chamber will offer the program it has long advocated based on the user pays concept that helped build the Interstate Highway system, said Ed Mortimer, vice president of transportation and infrastructure for the chamber.

These include hike federal fuel taxes again and move to a tax on the number of kilometers traveled, as well as expanding federal loan and borrowing programs to encourage more private sector, state and local investment, he said.

The chamber will also try to recalibrate how the money in the bill is spent to focus more spending on roads, bridges and transit systems and less on things like new electric vehicle charging points and other assets going forward, Mortimer said.

“This debate begins today and we look forward to working with the administration and non-partisan members of Congress to get a bill that needs to be put into effect urgently this year,” he said.

Earlier: Biden plans $ 2.25 trillion Spending, corporate tax increases

The Business Roundtable, a corporate lobby group, estimates that physical infrastructure in the US will require an investment of approximately $ 1 trillion to $ 1.5 trillion. The group also rejects higher corporate taxes as a payment method.

President Trump holds meetings with industry executives to plan the opening up of America

Photographer: Stefani Reynolds / CNP / Bloomberg

“Business Roundtable has a long history of supporting usage fee models, which include paying corporations’ equity to sustain infrastructure investments,” said Joshua Bolten, president and chief executive, in a statement. “Politicians should avoid creating new barriers to job creation and economic growth, especially during the boom. “

The American Trucking Associations also said Biden’s plan was “an important marker” at the start of the legislative process, but that a sustainable, user-based funding mechanism was needed.

“We do not believe the government funding proposal is politically tenable or a reliable long-term solution,” said Chris Spear, president and chief executive, in a statement.

Raising the corporate tax rate for all businesses isn’t the answer because too many businesses currently pay little to no corporate tax while others pay the full freight, said Michael Hanson of the Retail Industry Leaders Association. Closing tax loopholes or reintroducing some form of minimum corporate tax is a better approach, he said in a statement.

Americans for Tax Reform, a conservative allied group led by anti-tax activist Grover Norquist, plans to speak out against the higher tax rate and activate its coalition network in the states to oppose it, said spokesman John Kartch.

A higher corporate tax rate immediately translates into higher utility bills as companies pass the costs on and lower wages for workers. It will also hit small businesses that are organized as a business at the worst possible time as a business after the coronavirus pandemic, Kartch said.

“We will make it very difficult for the Democrats to hold this vote,” he said.

Vice President Pence's chief of staff Marc Short speaks at the White House

Photographer: Zach Gibson / Bloomberg

A new group led by Republican activists, including Marc Short, former Vice President Mike Pence’s chief of staff, is also planning a campaign of up to $ 50 million to target Democrats and possibly some Republican Congressmen who want to advertise the tax hike support in their districts.

Conservative lawmakers and lobbyists fear that business opposition to proposed tax hikes, which include a minimum tax of 21% on global corporate profits, will not be as strong as the campaign in support of the 2017 Republican tax overhaul, which cut the corporate rate, according to one conservative tax lobbyist who asked not to be named to discuss the situation.

The business community’s response to the tax hikes is likely to be mixed, as some industries will be more affected than others, the person said.

For example, tech companies are more likely to be opposed to the 15% minimum book revenue tax in Biden’s plan, the person said – specifically a company like Inc, which is both a tech company with research and development investments and a company that has retailers like Whole Foods Market Inc owns brick and mortar stores.

While corporate groups say they don’t want higher corporate taxes on infrastructure investments, corporations will benefit from the new contracts and spending, said Ray LaHood, a Republican and former Secretary of Transportation under President Barack Obama who is promoting infrastructure funding through building America’s future coalition.

“The Republicans don’t want to vote for any kind of tax,” LaHood said of Biden’s plan, which he will put into effect in some form by August because of the support the president currently has. “Let’s see if the deal comes off.”

– With the support of Ilya Banares, Anna Edgerton and Ryan Beene

((Updates with Biden comments from the fifth paragraph)

Before it’s here, it’s in the Bloomberg Terminal.


Related Articles