President Joe Biden
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President Biden heads into Wednesday night’s congressional speech on tense terms with the business community following proposals to raise the corporate tax rate and nearly double the capital gains tax for high-income Americans.

Biden is hoping to secure support from key business groups on issues like immigration and climate change, but that relationship will be tested by how he paints corporate America and wealthy households in his push for trillions in new infrastructure spending.

Experts say they’ll be closely watching Biden’s words Wednesday evening for any shift in the administration’s approach toward companies.

“The president and his advisers are pragmatic. They know that his political capital right now rests on a foundation of a really strong recovery. … I think you’ll see that reflected in rhetoric. There may be some key choice words or statements, but I would be surprised if there was some inflammatory class rhetoric,” said Dane Stangler, director of strategic initiatives at the Bipartisan Policy Center.

Biden’s goal of raising taxes, Stangler said, could be more palatable to some businesses if he also talks about areas where companies can see growth under his policies.

“If we’re in for higher taxes no matter what, if we think higher corporate taxes are going to happen no matter what, it helps even things out if our private businesses will also get support for innovation, for workforce, and remain competitive in other aspects — whether that’s through more R&D, whether that’s through greater attraction to high-skilled immigrants and things like that,” Stangler said.

Biden has proposed raising the corporate tax rate to 28 percent, from 21 percent, to cover the cost of his $2.3 trillion infrastructure package. Major business groups like the U.S. Chamber of Commerce, Business Roundtable and National Association of Manufacturers have said they would much prefer user fees or a gas tax, essentially shifting the cost to consumers instead of companies. But that would violate Biden’s pledge not to raise taxes on individuals making less than $400,000.

“Infrastructure’s a big priority for us. We’d like to see the president reconsider his job-killing tax hike to pay for it and adopt a more constructive user-fee way to pay for an infrastructure plan that we can all get behind,” said David French, senior vice president for government relations at the National Retail Federation.

The International Franchise Association said a discussion of infrastructure is just one topic they want to hear Biden talk about on Wednesday.

“We are hopeful the president puts forward a vision of working toward bipartisan solutions on shared goals issues like raising wages, closing the racial wealth gap and infrastructure spending,” said Matt Haller, the group’s senior vice president of government relations and public affairs.

The consensus among business groups is they want the U.S. to fully reopen after more than a year of coronavirus lockdowns and restrictions, and they want to hear how Biden plans to make that happen.

“I think he’s going to lay out a vision for how we get back to normal as quickly as possible, and I think we’re anxious to hear that vision,” French said.

Biden on Wednesday is expected to unveil the second part of his infrastructure package, a proposal in the neighborhood of $1 trillion that includes a capital gains tax hike for Americans with income above $1 million. He also is likely to announce plans to raise the top income tax rate on income for high earners.

Those components did not sit well with Wall Street when they were revealed last week, with stocks plunging after news of the capital gains proposal.

Biden cannot be dismissive of the business community’s pushback if he wants to maintain their support on major campaign issues like climate change and immigration.

The president also has an opening to take advantage of the feud between Republicans and their longtime business allies over voting laws and legislation targeting transgender people in numerous GOP-led states, in addition to companies distancing themselves from lawmakers who voted to overturn the 2020 presidential election results.

At the same time, Biden must be mindful of progressives who are wary of Democrats becoming too cozy with Wall Street and other major industries.

Business groups have been supportive of Biden’s focus on climate change in his infrastructure package, an area where they differ from Republican lawmakers who favor a narrower definition of infrastructure.

Major business groups are also throwing their support behind Biden’s immigration efforts after years of opposing former President Trump’s policies that imposed new restrictions on the H-1B visas that are granted to skilled workers.

The Chamber of Commerce, for example, has endorsed two House-passed immigration bills: the American Dream and Promise Act, which would provide citizenship to young people brought to the U.S. illegally as children, and the bipartisan Farm Workforce Modernization Act, a measure that would provide a pathway to citizenship for farmworkers.

But experts say that balancing the immediate push for infrastructure with further out goals like immigration will come down to what’s often the biggest campaign issue of all: the economy.

“I think the White House recognizes that if you’re looking ahead to 2022, if you’re looking ahead to 2024, a strong economy is what is going to help Democrats in general,” Stangler said. “They know they need to not do anything that’s going to harm the strong recovery that’s underway or create more uncertainty or undermine it.”

Tags Donald Trump Joe Biden joe biden president administration infrastructure plan corporate capital gains tax rate raise spending
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