President Joe Biden said in a private meeting on Wednesday that he would be willing to make concessions on his tax proposal in order to gain GOP support for his infrastructure plan, according to Washington Post sources.
One of President Biden’s campaign proposals was to reverse his predecessor Donald Trump’s tax reform, the Tax Cuts & Jobs Act. The president pledged to raise income and capital taxes on higher-income individuals and increase the corporate rate from 21% to 28%.
Biden is reportedly considering withdrawing the proposal to increase the corporate tax rate to 28%, and would instead push for a floor of 15%.
While this change would not increase the corporate tax rate, it would aim to tax the income of many multinationals that do not pay taxes in the United States because their headquarters are located in other countries, often in tax havens.
Biden’s change of opinion is due to the fact that he does not have absolute majority in the Senate and has two senators who are skeptical of his tax reform: Joe Manchin (from West Virginia) and Kyrsten Sinema (from Arizona).
Despite the tax change, it would not redirect the planned $1 trillion budget to invest in infrastructure (a decrease from his initial proposal of nearly $2 trillion) which nearly quadruples the Republican counterproposal of $257 billion.
The GOP has not only opposed Biden’s proposed tax increases, but has advocated redirecting the budget without using the pandemic to fund the infrastructure plan.
Republicans plan to meet with Biden on Friday to hammer out spending for the infrastructure plan, a meeting in which the president would play the tax cut card to avoid a possible GOP retreat from negotiations.
The withdrawal of the corporate tax increase is not the only chip the Biden-Harris administration has in order to gain the support of at least a few GOP senators. In recent months Biden has made concessions regarding oil and gas extraction projects in Alaska, Wyoming and the Dakotas in an attempt to win the support of senators from these respective states for his infrastructure plan.
According to a Washington Post source, the president could still seek to implement the tax increase, only he would do so in different legislation than the infrastructure plan, should the bipartisan negotiations reach no conclusion.
President Biden’s tax proposal still maintains his intention to increase the marginal tax on incomes above $400,000 (from 37 % to 39.6 %) as well as increasing the tax on capital gains over $1 million (from the current 20 % to 43.6 %).
Upon the news of the withdrawal of the corporate tax increase, the financial markets reacted to the rise in the main stock market indexes. However, the share prices of companies that have been characterized for paying relatively low or zero taxes, such as Amazon, Qualcom, and Micron, fell in the face of the announcement that a minimum tax of 15% would be established for corporations. A fact that would naturally affect these companies that have been characterized by their ability to avoid taxes.