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The business group is not onboard with a White House plan to raise taxes on corporations to help pay for public works upgrades.
Treasury Secretary Janet Yellen, speaking before a leading business group Tuesday, made a case for the Biden administration’s proposal to raise corporate taxes to help pay for a massive $2.3 trillion infrastructure package that the president and Democrats support.
“We are proposing to fundamentally reform the corporate tax system,” Yellen said during a forum held by the U.S. Chamber of Commerce. “That will help offset the cost of the proposed public investments.” Yellen said corporate taxes in the U.S. are at historic lows and added, “We believe the corporate sector can contribute to this effort by bearing its fair share.”
But Suzanne Clark, the Chamber’s president and CEO, speaking at the forum immediately after Yellen, left no question that the group remains opposed to the White House’s tax plans.
“The proposed tax increases would greatly disadvantage U.S. businesses and harm American workers,” Clark said. “The administration is right to champion infrastructure and we want to be there with them,” she added. “But there are other ways to finance it.”
The Chamber has consistently voiced support for new federal infrastructure investments in recent years. But, along with most Republicans, the group has balked at raising taxes on corporations to help pay for a public works package. Instead, the Chamber has endorsed the idea of “user-based” fees as a funding mechanism.
In general, examples of those sorts of fees might include things like the gas tax or mileage-based charges for drivers to fund roads, or utility bill payments that go toward covering the cost of drinking water or sewer systems upgrades.
Biden’s infrastructure package would funnel money to a variety of areas, including roads, transit, waterworks, broadband and expanding care for people who are aging or who have disabilities. It has a heavy emphasis on curbing emissions and combating climate change.
“For decades, the prevailing focus has been on the need to decrease and then limit the size of government as a share of the economy,” Yellen said at Tuesday’s event.
“We haven’t maintained our infrastructure let alone modernized it,” she added. “We haven’t sufficiently supported public research and development to ensure that America will maintain its technological edge.”
A group of GOP lawmakers, including U.S. Sen. Shelley Moore Capito, of West Virginia, who is the ranking member of the Senate Environment and Public Works Committee, last month put forward a more modest infrastructure proposal that calls for about $568 billion in spending.
Capito and other Republicans are engaged in talks with Biden and others in his administration, trying to come up with a compromise plan. The West Virginia senator has indicated that she and her Republican colleagues could release an updated proposal this week.
But, as has been the case in past years, how to pay for substantial new infrastructure spending remains a pitfall when it comes to bipartisan cooperation.
Biden’s plan calls for rising the corporate tax rate to 28%, from 21%. A Republican-backed tax law enacted in 2017 slashed the rate from 35%. That law was a major GOP achievement during Donald Trump’s time as president and party leaders have emphasized that dismantling the law would be a “red line” they are not willing to cross in infrastructure negotiations.
Apart from raising the rate, Biden is pushing for other changes to the tax code as part of his plan, including policies that are intended to capture more tax revenue from companies’ overseas profits. Yellen highlighted the administration’s push for a global minimum corporate tax, meant to set a floor for taxes imposed on companies regardless of where their profits are earned.
“We are working with our international partners on a global minimum corporate tax to stop the race to the bottom,” she said.
“We’re confident that the investments and tax proposals in the Jobs Plan, taken as a package, will enhance the net profitability of our corporations and improve their global competitiveness,” Yellen added. “We hope business leaders will see it this way.”
Bill Lucia is a senior editor for Route Fifty and is based in Olympia, Washington.