Biden seeks $2.5T in corporate tax hikes to fully pay for infrastructure
The Treasury Department on Wednesday released a report detailing President Biden’s proposals to increase corporate taxes to fund infrastructure investments.
Department officials said the proposals would raise about $2.5 trillion over 15 years and fully offset the cost of the new infrastructure spending.
During a call with reporters, Treasury Secretary Janet Yellen argued that the plan will be beneficial for both the federal government and businesses.
“Tax reform is not a zero-sum game, with corporations on one side and government on the other. There are policies that are mutually beneficial,” Yellen said. “Win-win is a very overused phrase, but we have a real one in front of us now.”
Biden last week released a $2.25 trillion infrastructure plan that would be paid for over 15 years through corporate tax changes, including an increase in the corporate rate from 21 percent to 28 percent.
The plan has quickly faced opposition from Republicans and business groups, who argue it will make the U.S. business climate less competitive. It will need widespread support from congressional Democrats to be enacted, given that Democrats only narrowly control the House and Senate.
Yellen argued that former President Trump’s tax law, which cut the corporate tax rate from 35 percent to 21 percent, furthers a global “race to the bottom” on corporate taxes and encourages U.S. companies to move profits to tax havens. She argued that this race to the bottom will hurt companies because lower tax revenues will translate to less ability for the U.S. to invest in transportation and research and development.
Under Biden’s plan, “America will compete on our ability to produce talented workers, cutting-edge research and state-of-the art research, not on whether we have lower tax rates than Bermuda or Switzerland,” Yellen said.
The report Treasury released Wednesday describes the various corporate tax proposals in Biden’s plan.
Some of the proposals are focused on preventing companies from moving profits to lower-tax countries. The report says that the proposals would “bring well over $2 trillion in profits over the next decade back into the U.S. corporate tax base.”
Another one of the proposals would create a 15-percent minimum tax on large companies’ income as it’s reported on their financial statements. The report says that if it were in effect in recent years, about 45 companies would have paid taxes under this proposal.
The White House is also proposing to eliminate tax preferences for fossil fuel companies and expand tax incentives for clean-energy production. Treasury said in the report that its estimates indicate that eliminating subsidies for fossil fuel companies would raise federal revenue by more than $35 billion in the coming decade.
-Updated 12:42 p.m.