Joe Biden is set to ax his flagship corporate tax hike which would have raised rate from 21% to 28% to try and pass his embattled spending bill
- White House tells Democratic lawmakers there likely won’t be corporate tax hike
- President Joe Biden planned to raise corporate tax rate from 21% to 28%
- Plan was to have hikes fund social programs including child care, health care
- But centrist Democrats in Congress have balked at the $3.5trillion price tag
- Biden White House now scrambling to strike compromise to save legislation
- Trump administration cut corporate taxes from 35% to 21% in 2017
The White House told Democratic lawmakers on Wednesday that a proposed hike in US corporate taxes is unlikely to make it into their signature social spending bill, according to a congressional source familiar with the discussions.
President Joe Biden’s plans to hike the corporate tax rate to 28 percent from 21 percent, a key campaign promise, are likely to be one of the steep concessions he makes to steer his economic revival package through Congress, the White House disclosed in the private meeting with top Democrats.
The proposed rate had sparked concern among small business owners who feared they could be penalized as harshly as larger corporations the proposed rise was intended to target, despite assurances from Biden that it would have no such impact.
‘There is an expansive menu of options for how to finance the president’s plan to ensure our economy delivers for hardworking families, and none of them are off the table,’ said White House spokesperson Andrew Bates.
Biden, his aides and congressional leadership are racing to close a deal as soon as this week on a set of tax hikes they hope will fund more than $1.75trillion over a decade in programs ranging from childcare to eldercare, healthcare, affordable housing and climate change mitigation.
President Joe Biden is seen above returning to the White House on Wednesday. Biden aides have told Democratic lawmakers that it is unlikely new spending legislation will include a corporate tax hike
They have no margin for error because Democrats hold only narrow majorities in the House of Representatives and Senate. Republicans oppose the legislation.
‘The president knows that he’s not going to get everything he wants in this package,’ White House spokesperson Jen Psaki told reporters on Air Force One.
‘Nor will any member of Congress, probably, and that’s what compromise is all about.’
The original price tag for the social spending bill was $3.5trillion, but it has now been hacked back to less than $2 trillion, with tuition-free community care college and indefinite raises to child tax credits also on the chopping block.
Democrats hope to pass the measure in the Senate through a ‘reconciliation’ process that requires support by only a simple majority rather than the 60 votes needed for most legislation in the evenly split 100-member chamber.
Democratic Vice President Kamala Harris holds the tiebreaking vote.
Biden, who framed the 2020 election against Republican then-President Donald Trump as one between working-class Scranton, Pennsylvania, and Manhattan’s Park Avenue, pitched the tax hike as an effort to make sure the wealthy and corporations pay their fair share.
Trump and congressional Republicans cut corporate rates to 21 percent from 35 percent in 2017.
After taking office in January, Biden paired the tax hike with a mix of programs he has argued will put the United States on a more sustainable economic footing to compete with China, from universal pre-kindergarten to dental benefits for seniors and incentives to encourage a shift to low-carbon energy sources.
Progressive legislators led by Senator Bernie Sanders, the independent from Vermont, have argued for a hike in corporate taxes
But centrist Democrats in Congress, including Senators Joe Manchin of West Virginia (left) and Kyrsten Sinema of Arizona (right), have balked at the proposed tax hikes and the $3.5trillion price tag
Business groups and Republicans have fought the measures, arguing they will hamper the economy’s recovery from the COVID-19 pandemic.
Two moderate Democrat senators – Joe Mancin and Krysten Sinema – have also held out, and are believed to be responsible for many of the concessions Biden has made so far.
‘When I ran for president, I came back to Scranton,’ Biden said on Wednesday on his first trip back to his birthplace since Election Day last November.
‘I resolved to bring Scranton values to bear, making fundamental shifts in how our economy works for working people, build the economy from the ground up … and not from the top down.’
Top Democrats may now put on the table alternate financing proposals for the bill that have been discussed for weeks, including imposing new levies on stock buybacks and business partnerships, according to a person familiar with the matter.
Kyrsten Sinema, a key swing-vote Democrat who has expressed the most concern about tax hikes, may be amenable to other measures that only raise rates for highly profitable large corporations paying next to nothing in federal taxes under current rules, according to Senate colleague Elizabeth Warren.
‘Our problem is partly about too low a rate at the top, and obviously some Democrats disagree,’ Warren, a Democrat, said on CNN.
‘But I think all the Democrats agree, by golly, everybody ought to be paying something.’
The S&P 500 closed 0.4 percent higher after the news about the White House’s private comments was first reported by The Washington Post.
After-hours trading in the US stock index trended 0.3 percent higher.