Manchin Says He Won’t Back Biden’s 28% Corporate Tax Rate
President Joe Biden’s $2.25 trillion infrastructure plan is already running into some roadblocks, with Republicans making clear they oppose it — and some Democrats now indicating they’ll seek significant changes.
Biden faces pushback from his own party: Progressives want Biden to spend more and expand his plan further. Sen. Bernie Sanders (I-VT) told CNN on Sunday that Biden had made a “serious proposal” but added that “a lot more work has to be done” to address what he and the White House call “human infrastructure.” Sanders indicated he’d want more money to address climate change and more done to lower health care costs.
Centrists have their own qualms about Biden’s plan. Biden has proposed raising the corporate tax rate to 28%, up from the 21% set by the 2017 Republican tax overhaul but lower than the 35% rate that had been in place before. Sen. Joe Manchin (D-WV) said Monday that the president’s proposal “needs to be changed” and that he wouldn’t support a 28% rate. Manchin said he would back a rate of 25%.
As Democrats sought to pass their $1.9 trillion Covid rescue package last month, Manchin flexed his muscle as a key vote in the evenly divided Senate, pushing for concessions he wanted on enhanced unemployment benefits. His comments Monday indicate he’s prepared to do the same on the infrastructure plan.
“If I don’t vote to get on it, it’s not going anywhere. So we’re going to have some leverage here," he said in an interview with West Virginia Metro News’s “Talkline” show. But Manchin added that other Democrats share his concern about the proposed corporate tax rate. “There’s six or seven other Democrats who feel very strongly about this,” he said.
Sen. Mark Warner (D-VA) also told reporters Monday that he has some concerns about the Biden plan and expects to have more input into the package.
Republicans suggest “much more modest” approach: Republicans, meanwhile, are making what Associated Press Congressional Correspondent Lisa Mascaro calls a “politically brazen bet that it’s more advantageous to oppose” the president’s plan. “Republicans are intent on saddling Democrats with responsibility for all the taxes and spending to come, much as they did the 2009 rescue after the economic crisis, framing it as government overreach that piles on debt,” Mascaro writes.
Senate Minority Leader Mitch McConnell (R-KY) told reporters Monday that Biden's plan is “something we’re not going to do.” He said his party could back a “much more modest” plan that isn’t paid for by corporate tax hikes.
Sen. Roy Blunt (R-MO), a member of Senate Republican leadership, told “Fox News Sunday” that Biden could win GOP support if he scaled back his plan by about 70% and focus a roughly $615 billion package on roads, bridges, ports, airports and perhaps water systems and broadband.
"I think there’s an easy win here for the White House if they would take that win, which is make this an infrastructure package which is about 30% — even if you stretch the definition of infrastructure some — about 30% of the $2.25 trillion they're talking about spending," Blunt said.
Blunt suggested the package could be paid for through taxes on infrastructure usage, such as gasoline taxes and levies aimed at electric and driverless vehicles, or other options agreed to on a bipartisan basis. Blunt added that the White House could then follow up that “easy victory” on infrastructure with a more partisan package addressing other elements of Biden’s plan that Democrats could try to pass on their own.
The White House said Monday that Biden is prepared to negotiate with Manchin and others on how to pay for the package. “He knows some will come forward with different ways to pay for this package, and some may have views that it shouldn’t be paid for at all,” Press Secretary Jen Psaki said.
But Biden shows no signs of being willing to dramatically slash his plan to satisfy Republicans. On Monday, he told reporters he will “push as hard as I can” for the plan to position the United States to better compete with other countries. "Everybody around the world is investing billions and billions of dollars in infrastructure, and we’re going to do it here,” he said.
Biden had indicated Friday that he thinks voters will see the benefit of his plan and could pressure GOP lawmakers to back it: “I think the Republicans’ voters are going to have a lot to say about whether we get a lot of this done.”
Dozens of Major Corporations Paid No Federal Income Taxes in 2020: Report
At least 55 large corporations paid no federal corporate income taxes in 2020, according to a new analysis by the Institute on Taxation and Economic Policy.
The companies in the analysis had more than $40 billion in pre-tax income and would have paid about $8.5 billion in taxes at the current 21% corporate tax rate. But none of those taxes were collected, and the companies instead received roughly $3.5 billion in rebates, bringing the total for tax breaks for the group to $12 billion.
“This continues a decades-long trend of corporate tax avoidance by the biggest U.S. corporations,” ITEP said, adding that “it appears to be the product of long-standing tax breaks preserved or expanded by the 2017 Tax Cuts and Jobs Act (TCJA) as well as the CARES Act tax breaks enacted in the spring of 2020.”
Some examples from the report:
* FedEx had $1.2 billion in U.S. pretax income in 2020 but paid no tax while receiving a rebate of $230 million.
* Nike paid no taxes on roughly $2.9 billion of U.S. pretax income last year, while receiving a $109 million tax rebate.
* Salesforce paid no federal income taxes on $2.6 billion of U.S. income.
Yellen Calls for Global Minimum Corporate Tax
Saying that governments need “stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises,” Treasury Secretary Janet Yellen made the case for a global minimum corporate tax rate Monday.
In a speech delivered to the Chicago Council on Global Affairs, Yellen called on the world’s major economies to end a “30-year race to the bottom on corporate tax rates” in which governments slash rates to attract globe-hopping businesses. As an alternative, Yellen said she is working with G20 nations on an agreement to impose a minimum tax rate across borders to create “a more level playing field in the taxation of multinational corporations.”
Yellen’s remarks come as the Biden administration seeks to increase corporate tax rates in the U.S., which some critics say could motivate businesses to shift profits to lower-tax countries. A Treasury official told Reuters that while the U.S. would use its own laws to prevent multinationals from shifting profits in pursuit of lower rates, it’s important for countries to limit the practice by working together to establish common rules. The U.S. is also involved in talks led by the Organization for Economic Cooperation and Development with about 140 countries to develop a global tax minimum.
A declaration of US leadership: Yellen’s speech marked a change in course from the previous administration, Bloomberg’s Saleha Mohsin and Christopher Condon report, signaling an end to the go-it-alone isolationism practiced by President Trump. “America first must never mean America alone,” Yellen said. “A lack of global leadership and engagement makes our institutions and economy vulnerable.”
Yellen will participate this week in the spring meetings of the International Monetary Fund and World Bank, during which the global minimum tax will be on the agenda. In addition, the finance leaders will discuss cooperation on a variety of issues, including the fiscal response to the Covid-19 pandemic, combating climate change and reducing global poverty, with the U.S. taking a leading role in accordance with what the Biden administration sees as its values and interests. “With few exceptions,” Yellen said, “stable and prosperous economies tend to be less of a security threat to the United States.”
Democrats Propose Tax Overhaul for Multinationals
As Yellen kicks off an effort to establish a global minimum tax rate, a trio of Democratic senators led by Finance Committee Chairman Ron Wyden (OR) have released a plan to overhaul the tax system for U.S. multinational corporations as part of an effort to generate revenues to help pay for President Biden’s infrastructure plan.
Co-authored by Sens. Sherrod Brown (D-OH) and Mark Warner (D-VA), the proposal calls for raising the tax rate on offshore profits and beefing up penalties for firms that shift profits overseas to avoid U.S. taxes.
“The international tax system should focus on rewarding companies that invest in the U.S. and its workers, stop incentivizing corporations to shift jobs and investment abroad, and ensure that big corporations are paying their fair share,” the proposal says. “Not only would these reforms make our international tax system better, they can raise revenue necessary to invest in America.”
The proposal touches on what The Wall Street Journal calls the three main elements of the U.S. international tax system: a minimum tax rate, rules to inhibit shifting profits, and benefits for exporters.
Although Wyden did not provide specific tax rates or revenue projections, similar plans have been estimated to raise billions of dollars from multinationals, The New York Times’ Jim Tankersley and Alan Rappeport report.
John Oliver Asks How Worried We Should Be About the 'Undeniably Big' National Debt
HBO’s “Last Week Tonight with John Oliver” dedicated the bulk of Sunday night’s episode to an in-depth look at the $28 trillion national debt, which Oliver called “an absolute f--- ton of money.”
"The truth is, our national debt is undeniably big, and between the trillions in coronavirus stimulus bills and the infrastructure plans [President Joe] Biden unveiled just this week, it's poised to get even bigger, and Republicans in particular seem outraged by that," Oliver said.
The host then explained the difference between deficits and debt and ran through some 40-plus years of tax and debt politics, all with the stated objective of trying to clarify how the national debt works, "how valid concerns about it are, and how we should think about it moving forward." Oliver slammed debt fearmongering and explained how mainstream economic thinking has shifted in recent years given the persistence of low interest rates in the face of ever-growing debt.
"Going into debt can actually be a good investment for the country," Oliver said. "Essentially, as economists will tell you, the key question is: Are you spending money on the right things?"
You can watch the whole 22-minute segment here (it includes a Nicolas Cage pillow, a “Bridgerton” comparison and, of course, some f-bombs and other NSFW language — hey, it’s not TV, it’s HBO). But the key takeaway from Oliver’s argument is this:
"There is a good-faith debate to be had over how to handle our national debt over the long term. But right now, most economists actually agree, with interest rates at historic lows, the question shouldn't really be 'How much debt are we taking on?' as much as, ‘What is the value of what we are getting for it in return?’ …
“Look, no one credible is saying that deficits don’t mater or that we should borrow as if the sky is the limit. What they are saying is the debate shouldn’t be about whether debt is good or bad. It should be about whether the investments that we are making are worth it or not.”
- Biden’s Next Big Bill Could Revive — or Bury — His Bipartisan Brand – Burgess Everett and Marianne Levine, Politico
- Joe Biden Was Wrong About the Republican ‘Epiphany’ – Paul Waldman, Washington Post
- Why a $2 Trillion Infrastructure Plan Is a Heavy Lift – David Lerman, Jennifer Shutt, and Evan Campbell, Roll Call (podcast)
- Fact Check: The GOP Claim That Only 5 to 7 Percent of Biden’s Plan Is for ‘Real Infrastructure’ – Salvador Rizzo, Washington Post
- Republicans Resort to Quibbling Over the Definition of Infrastructure – Jennifer Rubin, Washington Post
- The SALT Deduction Isn’t Just a Subsidy to High-Tax Blue States – Peter Coy, Bloomberg
- The GOP, America’s Most Selfless Political Party – Catherine Rampell, Washington Post
- One Cheer for the Return of Earmarks – Ramesh Ponnuru, Bloomberg
- One Million U.S. Jobs Heralds New Economic Era – Brian Chappatta, Bloomberg
- Can Biden Achieve an FDR-style Presidency? A Historian Sees Surprising Parallels – Greg Sargent, Washington Post
- The Case for Bold Debt Relief for the Poorest Countries – Mohamed A. El-Erian, Bloomberg
- Biden Wants to Spend Billions to Fight Climate Change. It’s Not Enough – Farhad Manjoo, New York Times
- Erasing Student Debt Makes Economic Sense. So Why Is It So Hard to Do? – Alana Semuels, Time
- There’s a Lot of Debt Out There. So What? – Matthew A. Winkler, Bloomberg