INFRASTRUCTURE TALKS AT IMPASSE
Infrastructure talks at impasse. With Democrats and Republicans at odds over the details of the infrastructure bill, it seems that both parties have dissension within their ranks as well, making agreement even more difficult. There is broad agreement among Democrats that the corporate tax rate is too low. The rate was slashed from 35 percent to 21 percent under former President Trump’s tax cuts and jobs act, which did not receive any Democratic votes. Msany Democrats have expressed support for Biden’s proposal to increase the corporate tax rate. Rep. Don Beyer (D-Va.), chairman of the Joint Economic Committee, characterized the 28 percent figure as “a prudent compromise” that “moderates and progressives would be wise to support.” The GOP argument that U.S. businesses cannot compete globally at that rate, Beyer added, is contradicted by history. “The rate was significantly higher from the post WW2 era until 2017, a timespan which included some of the most prosperous periods for the U.S. economy,” Beyer, also a member of the tax writing Ways and Means Committee, said in an email. Infrastructure talks at impasse.
Many Republicans want to raise the gas tax, which Democrats are against. “The gas tax is fast declining in its effectiveness and opposition is increasing,” Beyer said. “Using other sources, like adjusting the corporate tax rate, have greater promise of being enacted, restoring tax fairness, and generating the significant amount of money that is necessary to meet the needs of the American people.” Sen. Joe Manchin threw a curveball into the discussions when he said that he thinks that a 28 percent corporate tax rate it too high, and that he’d prefer a smaller increase, to 25 percent. Manchin’s support is necessary for any Democratic proposal in the 50-50 Senate.
It’s unclear how many other moderate Democrats will raise objections to Biden’s goal of a 28 percent corporate tax rate. But it seems certain that some type of compromise is going to happen prior to any agreement being reached for an final tax rate and bill being passed.