The Journal Gazette
 
 
Thursday, October 21, 2021 1:00 am

White House makes shift, shelves corporate tax hike

Associated Press

SCRANTON, Pa. – In an abrupt change, the White House on Wednesday floated new plans to pay for parts of President Joe Biden's $2 trillion social services and climate change plan, shelving a proposed big increase in corporate tax rates though also adding a new billionaires' tax on the investment gains of the very richest Americans.

The reversal came as Biden returned to his hometown of Scranton, Pennsylvania, to highlight the middle class values he says are at the heart of the package that Democrats are racing to finish. Biden faces resistance from key holdouts, including Sen. Kyrsten Sinema, D-Ariz., who has not been on board with her party's plan to undo Trump-era tax breaks to help pay for it.

“This has been declared dead on arrival from the moment I introduced it, but I think we're going to surprise them, because I think people are beginning to figure out what's at stake,” Biden said in a speech at Scranton's Electric City Trolley Museum, his first visit home since becoming president.

Negotiations between the White House and Democratic leaders on Capitol Hill are underway on what's now a scaled-back package but would still be an unprecedented federal effort to expand social services for millions and confront the rising threat of climate change. It's coupled with a separate $1 trillion bill to update roads and bridges.

Biden and his Democratic Party have given themselves a deadline to seal agreement after laboring to bridge his once-sweeping $3.5 trillion vision preferred by progressives with a more limited focus in a bid to win over party centrists. He has no Democratic votes to spare for passage in the divided Congress, and leaders want agreement by week's end.

The newly proposed tax provisions, though, are likely to sour progressives and even some moderate Democrats who have long campaigned on undoing the 2017 GOP tax cuts that many believe unduly reward the wealthy, costing the federal government untold sums in lost revenue at a time of gaping income inequality.

Administration officials spoke with congressional leaders on the tax alternatives, according to a person familiar with the private talks and granted anonymity. The changes may be needed to win over Sinema, who had objected to plans to raise the rates on corporations and wealthy individuals earning more than $400,000 a year, said the person and several others.

As it stands, the corporate tax rate is 21%, and Democrats want to lift it to 26.5% for companies earning more than $5 million a year. The top individual income tax rate would rise from 37% to 39.6% for those earning more than $400,000, or $450,000 for married couples. Under the changes being floated that 21% corporate rate would stay the same.

The White House is reviving the idea of a minimum corporate tax rate, similar to the 15% rate Biden had proposed this year. That's even for companies that say they had no taxable income – a frequent target of Biden who complains that they pay “zero” in taxes.


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