US President Joe Biden’s intention to raise corporate tax from 21% to 28% is facing stiff opposition from the financial elites.
As previously reported by News Front, by raising taxes for large American companies, Washington expects to finance the infrastructure restoration program proposed by Biden. True, in business circles this idea was not appreciated, forcing the White House to make a deal.
More than a dozen corporate and Biden officials interviewed by Reuters believe the president’s promise will never come true. They are betting on a compromise. Thus, corporations are ready to accept a tax increase of up to 25%.
“We don’t like it, but we are counting on 25%”, – said an unnamed lobbyist for one of the leading US energy companies.
“If so, we will consider it a victory”.
The corporate tax rate in the United States was reduced from 35% to 21% in 2017 thanks to the efforts of Donald Trump and the Republicans. True, many large American companies pay even less by transferring their profits abroad. Companies that have managed to cut tax payments include Google Alphabet Inc, Facebook Inc and Merck & Co.
White House sources admit that Biden’s plan was impracticable from the start, and the deal was the best scenario. Officials are now preparing to negotiate with the business community to discuss a tax hike of at least 4%, three administration officials familiar with the situation said.
“This plan will make America less competitive, which will mean less US economic growth and less job creation. The benefits of infrastructure will be offset by punitive tax increases. And if they only move forward with Democratic votes, the concept of doing anything on a bipartisan basis will end, and this will only deepen the impasse that impedes progress on all other issues”.
Raising the corporate tax rate from 21% to 28% would mean $850 billion in budget revenues. This would cover a significant portion of Biden’s infrastructure plan. If the tax is only raised to 25%, the state will receive only 500 billion. This will force Democrats to seek additional sources of income or cut spending.