President Joe Biden has defended his proposal to raise corporate taxes to help pay for his infrastructure spending plans, saying he was not worried the hike would harm the economy and there was no evidence it would drive business abroad.
President Joe Biden says other countries are spending billions on infrastructure and the US must also. Photo: 2021 Getty Images
Speaking to reporters in Washington after spending Easter weekend at the Camp David presidential retreat in Maryland, Biden again took aim at the 50 or 51 corporations on the Fortune 500 list that paid no taxes at all for three years, saying it was time for them to pay their share.
Asked if raising the corporate tax rate to 28 percent from 21 percent would drive away corporations, Biden said: "Not at all ... there's no evidence of that."
Biden's predecessor, Donald Trump, and Republican lawmakers cut the corporate rate to 21 percent in 2017 from 35 percent. Trump repeatedly promised to tackle the nation's crumbling infrastructure during his presidency but never delivered on that.
Biden's plans have drawn criticism from both Republicans and Democrats, including Democratic Senator Joe Manchin, whose support could be critical to ensuring passage in a Senate split evenly between the two parties.
White House press secretary Jen Psaki told reporters the Democratic president was open to discussions with Republicans and Democrats about how to fund the proposed investments.
Asked if the administration had analysed the cost of agreeing to a lower corporate tax rate of 25 percent, the highest Manchin says he would accept, Psaki noted the 28 percent rate would still be lower than it was at any time since World War II.
"Combined with the other tax proposals, it would pay for the totality of the package. That's why he felt it was a responsible proposal to make," Psaki said of Biden.
"There will be different ideas for pay-fors, there will be different ideas for tax proposals. That will all need to be weighed ... with leaders in Congress."
Democratic Senator Joe Manchin says he will only accept raising the corporate tax rate to 25 percent. Photo: 2021 Getty Images
Focus on reducing inequities
The US Chamber of Commerce, the largest US business group, last month called Biden's proposed hike in corporate taxes "dangerously misguided" and warned it would "slow the economic recovery and make the US less competitive globally".
The International Monetary Fund however backed the overall idea of richer countries using taxes to reduce inequalities exposed by the Covid-19 pandemic, including progressive income taxes, inheritance and property taxes, and taxes on "excess" corporate profits.
Biden, whose agenda is focused heavily on addressing racial and gender inequities, said other countries were investing billions of dollars in infrastructure, and the United States needed to do so as well to boost its competitiveness.
"I'm going to push as hard as I can to change the circumstances so we can compete with the rest of the world," he said. "Everybody else in the rest of the world is investing in infrastructure and we're going to do it here."
Biden pushed back at Republican criticism that his plan was filled with items unrelated to infrastructure.
He listed clean water, schools and high-speed rail as key items, in addition to more traditional projects such as bridges, highways and roads.
Energy Secretary Jennifer Granholm said on Sunday that Biden would prefer to secure Republican backing for his plan, but if that failed to happen, he would likely support using a procedural strategy called reconciliation to allow Democrats to pass it by a simple majority in the Senate.
Senate Republican leader Mitch McConnell said last week that Biden's infrastructure plan was "bold and audacious" but would raise taxes and increase debt. He vowed to fight it "every step of the way".
Support for tax increase from world's richest man
Jeff Bezos Photo: AFP
Amazon boss Jeff Bezos has said he supports raising taxes on US companies.
In his speech unveiling the proposal, Biden singled out Amazon as an example of a company that pays too little.
The statement by Bezos said Amazon supported Biden's "focus on infrastructure" and called on Democrats and Republicans to "work together" and reach a compromise.
"We recognise this investment will require concessions from all sides - both on the specifics of what's included as well as how it gets paid for (we're supportive of a rise in the corporate tax rate)," Bezos said in the statement.
"We look forward to Congress and the Administration coming together to find the right, balanced solution that maintains or enhances US competitiveness."
- Reuters / BBC