President Joe Biden speaks during his first press briefing in the East Room of the White House in Washington, DC on March 25, 2021.
Jim Watson | AFP | Getty Images
The American business community is trying to figure out how to approach President Joe Biden’s infrastructure plan, which calls for increased corporate taxes to help pay for at least $ 2 trillion in government spending.
Several prominent business groups, such as the US Chamber of Commerce, oppose the proposed tax increases. Behind the scenes, however, some companies are considering whether to fight back due to U.S. business demand for an infrastructure overhaul, according to people familiar with the matter.
Lobbyists and other DC influencers told CNBC they had received calls from corporate clients who were anxious and eager to receive advice on the way forward. Some people have declined to be named in this story in order to speak freely about the ongoing private conversations.
The White House unveiled the plan on Wednesday and Biden will discuss it in an address in Pittsburgh later today. He calls for raising the corporate tax rate from 21% to 28%.
In some cases, corporate clients have spoken with lobbyists, potentially negotiating with the White House and Congressional Democrats about potential compromises to raise the corporate rate to 28%, according to a lobbyist who represents the tech giants and Wall Street banks. One of the ideas thrown behind the scenes is to convince Congress to find common ground on Global Low Tax Intangible Income, or GILTI.
According to the Tax Policy Center, GILTI is “income earned by foreign affiliates of US companies from intangibles such as patents, trademarks and copyrights.” The GILTI minimum tax is set at 10.5%. Biden wants to raise the minimum rate to 21%.
Other companies have asked their lobbyists to convince moderate Democrats in Congress to support a 25% corporate tax rate instead of 28%. Democratic Senator Joe Manchin, who represents GOP-friendly West Virginia and is a crucial deciding vote in the equally divided Senate, called for raising the corporate rate to about 25% instead of 28%.
A lobbyist told CNBC that several of his clients appeared to be divided over whether they would push back the proposed tax hike, as U.S. companies have long hoped for a massive infrastructure bill.
“I think they’re all over the place because I think there’s a lot of money being spent in a way that attracts a lot of businesses,” another lobbyist told CNBC. “If you are involved in broadband electric vehicles you go down the list, there is a lot of positive spending that will appeal to American businesses.” This lobbyist represents the automotive and airline giants, as well as large private equity firms.
“On the other hand, nobody likes an increase in corporate taxes,” the lobbyist added.
Other lobbyists have indicated that their clients will defer to corporate advocacy groups such as the Chamber of Commerce, the Business Roundtable and the RATE Coalition.
The RATE Coalition lists a large number of corporate giants as members on its website, including FedEx, Capital One, Altria, Lockheed Martin and Toyota. The group recommends keeping the corporate tax rate at 21%. A person familiar with the matter told CNBC the group was “prepared to spend what is necessary” against Biden’s corporate tax rate proposal.
Former Senator Blanche Lincoln, D-Ark., A leader of RATE, pushed back on Biden’s proposed new corporate rate and called on Congress and the administration to focus on closing tax loopholes instead.
“I urge my former colleagues in Congress and my friends in administration to close the loopholes that allow profitable businesses to pay little or no tax,” she told CNBC.
The Chamber of Commerce and the Business Roundtable have also publicly berated the increase in the business rate. It comes as many other outside groups were preparing for an all-out war on Biden’s tax concepts.
A business advocacy group, which declined to be named because it is still in the planning phase of its campaigns, was already making TV ad buys that, in part, will push the rate back Biden Corporate Tax.
The fossil fuel industry is targeted in the Biden plan. The administration said it would fund part of the spending by eliminating tax credits and subsidies for fossil fuel producers.
The American Petroleum Institute, which is the oil and gas industry’s largest trading group, opposes the use of taxes to pay for the plan.
“Targeting specific industries with new taxes would only undermine the country’s economic recovery and jeopardize well-paying jobs, including unionized jobs,” said Frank Macchiarola, senior vice president of policy and regulatory affairs at API. “It is important to note that our industry does not benefit from any special tax treatment, and we will continue to advocate for a tax code that supports a level playing field for all economic sectors as well as policies that support and increase the billions of dollars in government revenue we help generate. “
The API has dozens of members, including energy giants such as Chevron, BP and Shell.
The API had previously approved a price on carbon emissions that warm the planet, marking a major shift after long resisting regulatory action on climate change.