“I’m wide open, but we have to pay for it,” Biden told reporters following his remarks on the US jobs plan. “There are many other ways to do it. I have come up with the best, the most rational in my opinion, the fairest to pay. But there are many other ways too, and I’m open.”
The president invited Republicans and others to meet with him, although he warned he would not accept a narrow definition of infrastructure as mere highways and bridges.
Noting that corporate tax collections have fallen to their lowest level since World War II, Treasury Secretary Janet Yellen said on Wednesday that the Republicans’ Tax Cuts and Employment Act 2017 did not attract new productions or investments to the United States. Instead, he made companies send workers and profits overseas.
In addition, other countries have lowered their corporate tariffs in response to the United States’ underestimation, she said on a conference call with reporters.
She argued that the administration’s proposal – dubbed the “Made in America” tax plan – would make the nation more competitive and remove incentives to relocate. That way, more of the income stays in the United States and can be used to fund the $ 2 trillion Biden wants to invest in roads, bridges, broadband, clean energy, senior care and d ‘other measures.
Overall, as a result of tax cuts in previous years, the United States now only grows about 16% of GDP in federal tax revenues, a decline of about four percentage points over the years. last two decades.
However, Commerce Secretary Gina Raimondo signaled on Wednesday that the president was ready to compromise on the proposed increase in the corporate tax rate to 28%, but still called on Congress to “go big. “.
Biden had instructed Cabinet to “work across the aisle and in a bipartisan fashion” to pay for the plan, she said. While the administration proposes to invest over eight years and pay it back over 15 years, Raimondo said officials were ready to discuss paying it back over 20 years and increasing the rate to less than 28%.
“What I implore the business community not to do is to say, ‘We don’t like 28%. We walk away, we don’t argue.’ This is unacceptable,” he said. she declared. “Come to the table and solve the problems with us to come up with a reasonable and responsible plan.”
Raimondo called for a “discussion” with congressional leaders and instructed opponents to “tell us what you think is a reasonable alternative plan”, as long as he doesn’t “bypass America”.
Report exposes Biden case
The White House also made its case in a 19-page report released on Wednesday. He focused on four main messages: that his tax package would increase needed revenues, prevent companies from shifting profits and operations abroad, make the system fairer for workers and move towards a cleaner energy sector. .
Republicans’ tax cuts in 2017, which cut the corporate tax rate from 35% to 21%, meant that the share of tax revenue collected as a share of the economy fell to 1%, the White House said. Historically, corporate taxes have increased by around 2% of GDP.
Moreover, the report points out that the United States has generally generated less income from corporate taxes compared to other advanced countries. Over the past two decades, the typical Organization for Economic Co-operation and Development country has generated around 3% of its GDP through corporate taxes.
Like its predecessors, the Biden administration is also trying to stem the tide of profit transfers from U.S. companies to overseas tax havens through various measures, including a global minimum tax. He is seeking to end the provisions of the 2017 tax law, which he described as “ill-conceived”. These proposals would bring well over $ 2 trillion in profits over the next decade to the U.S. corporate tax base, according to the White House.
The administration also argues that it can create a fairer tax system by increasing corporate taxes and tackling rising income inequalities.
The report highlights the fact that the share of federal revenues generated by corporate taxes has declined steadily since 1950 and is now below 10%. Meanwhile, the share of federal revenue collected by individuals now exceeds 80%.
The president’s plan would also eliminate some subsidies to fossil fuel producers and expand tax incentives for clean energy production.
By eliminating the subsidies, tax revenues would increase by $ 35 billion over 10 years, according to estimates from the Treasury Department’s Office of Tax Analysis. The administration argues that the incentives would help tackle climate change by reducing air pollution.
What’s in the plan
Increase in corporate tax: Biden would increase the corporate tax rate to 28%, from 21%. The rate hit 35% before former President Donald Trump and Republicans in Congress cut taxes in 2017.
Global minimum tax: The proposal would raise the minimum U.S. corporate tax to 21% and calculate it country by country to deter companies from sheltering their profits in international tax havens.
Tax on accounting income: The president would levy a minimum tax of 15% on the income that the largest corporations report to investors, known as accounting income, as opposed to income reported to the Internal Revenue Service. The administration said that in recent years around 45 companies would have paid a minimum accounting tax under the proposal, with the medium-sized company that sees its minimum liability increased by around $ 300 million each year.
Company reversals: Biden would make it harder for US companies to acquire or merge with a foreign company to avoid paying US taxes by pretending to be a foreign company. And he wants to encourage other countries to adopt strong minimum corporate taxes, including denying certain deductions to foreign companies based in countries without such a tax.
Clean energy incentives: The plan aims to advance the production of clean electricity by providing for a 10-year extension of tax credits for the production and storage of clean energy, and by making these credits pay off directly. It would also create and expand other incentives. The administration would remove subsidies for the oil and gas industry, which would increase government tax revenue by more than $ 35 billion over the next decade, according to estimates from the Treasury Department’s Office of Fiscal Analysis.
Enforcement: The president also wants to provide more funding to the IRS to better prosecute companies that do not meet their tax obligations. The share of large companies facing audits has halved over the past decade, the White House has said.
Supporters and opponents
The infrastructure and tax proposals quickly drew criticism and praise.
The US Chamber of Commerce has strongly criticized Biden’s proposal to lift Trump’s corporate tax cuts.
“We believe the proposal is dangerously flawed when it comes to how to pay for infrastructure,” Neil Bradley, House policy director said last week, in a statement echoing comments he had previously made to CNN Business.
American companies already face a global minimum tax on their income and no other country has followed the American example in adopting such a tax, said Joshua Bolten, CEO of the Business Roundtable, whose members are the managing directors. large American companies.
“The administration’s proposed minimum world tax rate, however, threatens to subject the United States to a major competitive disadvantage,” he said.
The massive plan has also raised concerns in Congress. Already West Virginia Senator Joe Manchin, a key Democratic vote, has said he will not agree to raise corporate taxes above 25%.
Administration officials, meanwhile, took to the road to mobilize additional support.
“We are working with the G20 countries to agree on a minimum overall corporate tax rate that can stop the race to the bottom,” Yellen said in a speech to the Chicago Council on Global Affairs. “Together, we can use the global minimum tax to ensure that the global economy thrives, a more level playing field in the taxation of multinational corporations, and to drive innovation, growth and prosperity. “.
This story has been updated with additional comments and details.
CNN’s Devan Cole, Jasmine Wright, Matt Egan and Manu Raju contributed to this report.