Chamber of Progress, a new tech industry group funded by giants like Amazon, Facebook, and Google, announces its support for a corporate tax hike proposed by President Joe Biden to add to its $ 2 trillion infrastructure plan finance.
The move differentiates Chamber of Progress, a new center-left group, from other business associations that have spoken out against Biden’s tax hike, such as the Business Roundtable and the US Chamber of Commerce. While the group’s approval doesn’t reflect the individual views of each company it funds, it sends a signal that the tech industry is open to higher tax rates and supports larger infrastructure investments.
Launched late last month, Chamber of Progress is an industrial coalition focused on a range of economic, social and consumer issues, including creating a social safety net and tackling income inequality.
Biden proposed raising the corporate tax rate from 21% to 28% to fund his American employment plan, which includes infrastructure proposals for the entire economy. The plan includes money to expand broadband availability, which is vital to the success of internet businesses, and other priorities that the tech industry has highlighted, such as clean energy.
“The plan addresses many goals that I believe many people in the tech industry have long wanted to see,” said Adam Kovacevich, Founder and CEO of Chamber of Progress, in an interview with CNBC on Wednesday.
Kovacevich said his group’s openness to a higher tax rate was not a calculation-based decision.
“Certainly all the business benefits of having better infrastructure,” he said. “But I really don’t think people in tech see it that way. I don’t think they think, ‘This is great for the bottom line.’ Most technicians believe that these types of investments are good for American society and also for America’s technological leadership in the world. “
Kovacevich said it is possible for the tech industry to occupy this position because, in his 15 years’ experience at tech companies like Google and Lime, he has found that investment decisions are not based on corporate tax rate, but rather on what opportunities for expansion are available.
“From my experience in the tech industry, this is a business most tech companies can live with,” he said of the tax hike.
Automattic, Doordash, Getaround, Grubhub, Instacart, Lime, Twitter, Uber, Waymo, Wing and Zillow are also partners who support Chamber of Progress. The group says partners don’t sit on their board of directors or vote on their policies.
The Progress Chamber has not set a specific rate at which it believes corporate taxes should be set, and Biden has expressed his openness to negotiating the details of his infrastructure plan. Jeff Bezos, CEO of Amazon, announced his support for a tax hike, even though he wasn’t directly in favor of the 28% rate.
Biden previously recognized Amazon for its historically low federal income tax payments, which the company attributed to tax credits including for research and development. Amazon paid $ 162 million in income taxes in 2019 after paying $ 0 for two years. Last year total sales of $ 386 billion were reported.
The decision by the Chamber of Progress to support a domestic tax hike comes from the fact that the tech industry is at risk of higher taxes from abroad. In a pre-published blog post by CNBC, Kovacevich referred to efforts in Europe to impose a tax on digital services that would affect large US tech companies and called such proposals “discriminatory”. He praised the Biden administration for pushing back the moves and wrote that the US had a “national interest” in a fair global tax system.
“US corporations must also be able to hold their own against foreign competitors, and so Congress should focus on how US corporations’ foreign revenues can be taxed fairly,” wrote Kovacevich. “Our tax system should continue to encourage companies to invest in research and development. Congress should examine carefully how the current limit on state and local tax deductions could compromise the ability of technology companies to attract talent.”
Kovacevich wrote that he respected companies that fear the tax hike would have a negative impact, but said that serious action was needed to improve U.S. infrastructure.
“President Biden’s proposal to raise corporate tax rates to make bigger investments in infrastructure is a compromise many in the tech industry can support,” he wrote.
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