Biden is willing to give up raising corporate taxes in infrastructure negotiations

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According to people familiar with the matter, if enough Republicans agree to support a surge in infrastructure spending, Joe Biden is prepared to abandon the requirement to raise the US corporate tax rate.

The US President’s concession aims to bring about an agreement between the two parties that he will fund more than $1 trillion in additional expenditures over the next 10 years to upgrade the country’s roads, bridges and broadband networks.

The President of the United States hopes to fund the plan mainly by increasing the corporate income tax rate from 21% to 28%, but Republicans firmly oppose it on the grounds that this will harm the economy and partially cancel Donald Trump’s signature tax cut.

In a meeting with West Virginia Senator and Republican chief negotiator Shelley Moore Capito (Shelley Moore Capito) on Wednesday, Biden said that in order to reach a bipartisan agreement, he is willing to give up his insistence on raising corporate income taxes.

But he proposed that new infrastructure spending should be funded by the IRS’s more aggressive tax enforcement for wealthy families. He wants to impose a minimum tax of 15% on companies so that they cannot take advantage of the loopholes, which means they end up paying little or no.

“It doesn’t mean that he has to give up his right [Trump tax cuts] And wealthy taxpayers and the company or his overall plan,” said a person familiar with the matter. “But. .. In order to cross the aisle and find a practical agreement, especially in the context of these negotiations, this is his solution. “

Biden’s move was to negotiate with Republicans on infrastructure issues before the deadline set by himself next week, or to abandon them and try to use the weak Democratic majority in Congress to pass the deadline for the plan.

According to the White House, the President of the United States is expected to “reconnect” with Capito on Friday to discuss the status of the talks.

Biden’s decision to abandon the increase in corporate income tax may only be temporary and limited to Republican negotiations. If the President of the United States finally negotiates an additional spending plan with the Democratic Party, the increase in corporate income tax is likely to be put on the table again.

Nonetheless, the presidential move first reported by the Washington Post highlights the political difficulties of promoting any revenue growth with total opposition from the Republican Party. The President of the United States also intends to increase personal taxes on the wealthy — including capital gains and dividends — to fund his economic agenda.

The concessions made by the President of the United States in the Republican negotiations are related to domestic taxation and are separate from his proposal for international corporate tax reform.

On the global front, Biden is seeking to reach a compromise with other countries and set a minimum tax rate of 15% to eliminate tax avoidance and incentives to transfer profits to low-tax countries.

In the next few days, as the G7 finance ministers meet in London to discuss US plans, a breakthrough in global tax policy may be achieved, which may lay the foundation for a broader agreement at the OECD and G20 levels.

The infrastructure plan that Biden formulated in late March was worth $2.3 trillion, but during the negotiation with Capito, he gradually lowered the target because the Republican party has increased the amount it is willing to spend.

A possible compromise may be found, with a price tag of slightly more than $1 trillion, but it is not clear whether both parties will find that tasty.

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