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Biden offers tax deal to Republicans in infrastructure talks

Sen. Shelley Moore Capito, joined by three fellow senators, speaks from a lectern.
Sen. Shelley Moore Capito (R-W.Va.) is the Republicans’ lead negotiator on infrastructure legislation.
(Associated Press)

President Biden is trying to break a logjam with Republicans on how to pay for infrastructure improvements, proposing a 15% minimum tax on corporations and the possibility of revenue from increased IRS enforcement as a possible compromise.

The offer was made Wednesday to Republican Sen. Shelley Moore Capito of West Virginia as part of bipartisan negotiations and did not reflect a change in Biden’s overall vision for funding his infrastructure package.

White House Press Secretary Jen Psaki said Biden had examined possible tax code changes from his plans that Republicans might support. The president concluded that a minimum corporate tax could provide some common ground.

“He looked to see what could be a path forward with his Republican colleagues on this specific negotiation,” Psaki told reporters Thursday at a briefing. “This is a component of what he’s proposed for a pay-for that he’s lifting up as a question as to whether they could agree to that.”

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Biden has proposed increasing the corporate tax rate to 28% from 21% to help fund his plans for roads, bridges, electric vehicles and broadband internet, and that remains one of his preferred approaches. But the rate hike is a nonstarter with Republicans because it would undo the 2017 tax cuts signed into law by President Trump.

The White House will send 75% of excess U.S. COVID-19 vaccine doses to the U.N.-backed COVAX global sharing program.

By floating an alternative — there is no minimum corporate tax now on profits — Biden was trying to give Republicans a way to back infrastructure without violating their own red line of keeping corporate tax rates at their current level. The Washington Post first reported the offer.

On Thursday, Senate Republican leader Mitch McConnell of Kentucky said he had spoken with Capito and was “still hoping” to reach a deal with the administration. But he prefers the GOP approach of a scaled-down package, paid for by tapping unspent COVID-19 relief funds, rather than taxes.

“Let’s reach an agreement on infrastructure that’s smaller but still significant, and fully paid for,” he said in Paducah, Ky.

Biden is essentially staking out the principle that profitable corporations should pay income taxes. Many companies can avoid taxes or minimize their bills through a series of credits, deductions and other ways of structuring their income and expenses.

The president has insisted that the middle class should not bear the cost of greater infrastructure spending. Yet a chasm exists in negotiations because Republicans say corporate tax increases will hinder economic growth.

The idea of imposing a minimum corporate tax is not new for Biden; he also proposed the idea during the presidential campaign last year, and that could turn off some Republicans. The center-right Tax Foundation has estimated that a minimum tax would subtract 0.21% from the U.S. gross domestic product in the long run.

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“He’s been pushing it since the primaries over a year ago,” said George Callas, a former tax counsel to House Republicans who is now managing director of government affairs for the law firm Steptoe. Callas said the minimum tax would mostly hit firms such as electric utilities and telecoms that make substantial capital investments, as well as companies that rely on paying their employees with stock.

Biden has put unions at the center of policy — as vehicles to rebuild middle-class jobs and address climate change and racial and gender inequity.

At the same time, both Democrats and Republicans have eyed the revenue that could come from stepped-up Internal Revenue Service enforcement of unpaid taxes. House Speaker Nancy Pelosi (D-San Francisco) has suggested it could amount to some $1 trillion, but others estimate the increase would be far lower.

Biden is seeking roughly $1 trillion in infrastructure spending, down from an initial pitch of $2.3 trillion. Republicans, so far, have countered with only $257 billion in additional spending on infrastructure as part of a $928-billion package. The GOP’s new spending on infrastructure would be a fraction of what the president says is necessary to compete globally and boost economic growth.

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Transportation Secretary Pete Buttigieg said Thursday while visiting Memphis, Tenn., that both sides in the infrastructure talks appeared to embrace “the principle that something on the order of $1 trillion around the transportation side of things was appropriate.”

The negotiations — a daunting undertaking given the massive investment required for Biden’s top legislative priority — have been moving slowly, and time for a deal is running out. The administration has set a Monday deadline for seeing a clear direction and signs of progress.

Biden and Capito are set to meet again on Friday, though it’s not clear whether the meeting will be in person.


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