Biden ready to drop corporate tax hike in infrastructure talks

Joe Biden is prepared to drop his demands to raise the U.S. corporate tax rate if enough Republicans agree to back increased infrastructure spending, according to people familiar with the negotiations.

The US president’s concession is intended to catalyze bipartisan agreement on his bid to fund more than $1 billion in additional spending over the next decade to upgrade roads, bridges and broadband networks across the country.

The US president wanted to fund the plan primarily with an increase in the corporate income tax rate from 21% to 28%, but Republicans adamantly oppose it on the grounds that it would hurt the economy and partially undo the Donald Trump signature tax. cuts.

In a meeting with Shelley Moore Capito, a senator from West Virginia and chief Republican negotiator in the talks on Wednesday, Biden said he was ready to drop his insistence on raising corporate taxes in the US. interest of a bipartite agreement.

But he proposed that new infrastructure spending be funded through more aggressive enforcement of tax laws by the Internal Revenue Service on wealthy households. And he wants to impose a minimum tax of 15%. 100 to businesses not to take advantage of loopholes that charge them very little or nothing.

“That doesn’t mean he’s giving up his overall positions on the [Trump tax cuts] and wealthy taxpayers and corporations or his overall plans,” said a person familiar with the talks. “But . . . in the interest of crossing the aisle and finding a practical agreement, in the context of these negotiations in particular, it is a solution that he has proposed.

Biden’s decision came ahead of next week’s self-imposed deadline to continue negotiations with Republicans on infrastructure, or to ditch them and try to push through the package using the razor-thin Democratic majorities in Congress.

The US president is expected to “reconnect” with Capito on Friday to discuss the status of the talks, according to the White House.

Biden’s decision to drop his corporate tax hike offer may only be temporary and limited to Republican negotiations. If the US president ends up negotiating an additional spending package with the Democrats alone, a corporate tax hike will likely be on the table again.

Still, the president’s move, first reported by The Washington Post, highlights the political difficulty of pushing through any revenue increases in the face of outright Republican opposition. The US president also aims to raise individual taxes on the wealthy – including on capital gains and dividends – to fund his economic agenda.

The concessions made by the American president in the Republican negotiation relate to national taxes and are distinct from his international proposals for corporate tax reform.

On the global front, Biden is seeking a compromise with other countries to set a minimum tax of 15% to remove incentives for tax avoidance and profit shifting to low-tax countries.

A breakthrough on global fiscal policy could come in the coming days as G7 finance ministers meet in London to discuss the US plan, perhaps paving the way for a broader deal at OECD and US levels. G20.

Biden’s infrastructure plan, presented in late March, is worth $2.3 billion, but in talks with Capito he has gradually lowered his target as the Republican Party has increased in terms of the amount it is ready to spend.

A possible compromise could be found with a price tag of just over a trillion dollars, but it’s still unclear if either side would find that acceptable.