- A group of Republican and Democratic senators signed a bipartisan infrastructure deal on Thursday.
- President Joe Biden supported the framework, which omits several of its suggestions.
- One measure that didn’t make it: An increase in taxes on companies to offset expenses.
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A corporate tax rate hike didn’t make it into the latest iteration of the infrastructure package – which signals a major compromise by President Joe Biden.
On Thursday, Biden endorsed the bipartisan framework for a $ 1 trillion deal that was a huge step forward amid ongoing infrastructure negotiations but left a corporate tax hike in place of other payments and expense offsets. Biden had proposed raising the corporate tax rate from 21% to 28% after the rate was lowered from 35% in Trump’s 2017 tax law. Senate minority leader Mitch McConnell has called the 2017 tax bill a red line for the GOP that should be left untouched.
Instead, a document outlining the bipartisan agreement lists reducing the tax gap – the gap between taxes owed and taxes collected – as one possible way to offset spending. This reflects the rhetoric of the American Families Plan, which would provide funding for the enforcement of the IRS to crack down on wealthy tax evaders.
Senator Mark Warner (D-Va.), Part of the bipartisan group, told reporters that “there is a lot of evidence that if you invest more in the IRS, it will pay out a huge dividend.” He cited an estimate by IRS Commissioner Charles Rettig that the tax gap could be on the order of $ 1 trillion a year.
A $ 40 billion investment in the IRS, Warner said, could bring in gross profits of $ 100 billion, which translates into roughly $ 60 billion net to fund the expenses.
In remarks following the announcement of the deal, Biden said he was looking forward to receiving the bipartisan agreement on physical infrastructure as well as a “human infrastructure” law that is likely to receive only party line support.
“We have to do that during the budget process and we need a fair tax system to pay for it all,” Biden said, referring to the reconciliation process required to pass the human infrastructure law. “I won’t rest until they’re both at my desk.”