Senate Democrats settle on 25% corporate tax rate

The universe of Democratic senators concerned about raising the corporate tax rate to 28% is larger than that of Senator Joe Manchin, and the rate will likely land at 25%, according to parties close to the discussion in Axios.

Why is this important: If increasing the rate from 21% to 25% would raise about $ 600 billion over 15 years, that would leave President Biden well ahead of paying for his $ 2.25 trillion eight-year infrastructure project.

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  • Biden’s plan to increase the rate that U.S. multinationals pay on their foreign revenues from 10.5% to 21% is less controversial and has a better chance of remaining intact in final legislation. This would raise an additional $ 700 billion.

  • But corporate lobby groups are bracing for a long-term battle over the two rates.

  • The Business Roundtable launched an advertising campaign last week and published a survey of 178 CEOs discussing how the proposed changes would affect their businesses’ competitiveness.

The big picture: The White House has not publicly waived the president’s proposed 28% rate, but has indicated it is willing to find a compromise to pay for its spending plans.

Driving the news: A group of 10 senators from both sides – the so-called Group of 20 – are trying to find a compromise on what to include in an initial infrastructure package and how to pay for it.

  • “If we come together in a bipartisan fashion to pass this $ 800 billion hard infrastructure bill that you were talking about, which I urged, then we are showing our people that we can solve their problems,” Senator Chris Coons (D- Del.) Said on “Fox News Sunday”.

  • Senator Susan Collins (R-Maine) crystallized the G-20 challenge by breaking it down into three questions: scope, size and compensation.

  • “It is much easier to find appropriate payments and a bipartisan agreement if we are talking about a more targeted package that is really focused on infrastructure,” she said last Thursday.

Between the lines: While Manchin (DW.Va.) has made it clear his preference for a 25% rate, he is far from alone.

  • Democrats who have hinted privately that they might be uncomfortable going to 28% understand the senses. Tim Kaine and Mark Warner from Virginia, Kyrsten Sinema from Arizona and Jon Tester from Montana.

  • The Democratic dynamic is similar to that of raising the minimum wage to $ 15 an hour, which was ultimately rejected by eight Senate Democrats.

  • Some of them have talked about something closer to $ 11.

Go further: There is a similar sentiment in the House, where moderates are also opposed to excessive tax increases, Axios had reported.

Be smart: Democrats view the corporate rate debate as a litmus test of Republican interest in bipartisanship in the Biden era.

  • If they can find common ground, they hope to work on other issues.

  • Many are skeptical, even though Republicans say infrastructure spending is badly needed.

  • Failure to reach consensus here would only fuel calls to use budget reconciliation to push through other spending plans.

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