Democrats Differ on Taxes to Pay for Infrastructure Plan Sen. Joe Manchin, (D-W.Va.) chairman of the Senate Committee on Energy and Natural Resources, at the U.S. Capitol on February 24, 2021 in Washington, DC. (Leigh Vogel-Pool/Getty Images)
By Charlie McCarthy | Wednesday, 07 April 2021 12:40 PM
Cracks have reportedly formed among the Congressional Democrats debating how to raise the taxes needed to finance President Joe Biden's $2.25 trillion infrastructure plan.
Some Democrats are pushing back on aspects of the president's tax proposals, The Hill reported on Wednesday.
Biden wants to pay for the plan over 15 years by raising the corporate tax rate from 21% to 28%, and increasing taxes on U.S. companies’ foreign earnings.
With Republicans signaling united opposition to Biden's proposal, which was announced last week, Democrats need near-universal party support to pass infrastructure and jobs legislation. Reaching consensus on taxes will be among the top challenges.
Republicans oppose lowering the corporate tax rate, which was reduced from 35% to 21% under former President Donald Trump’s 2017 tax cut law. Democrats generally assert the rate is too low.
Democrats are likely to again use the reconciliation process to pass an infrastructure package with a simple majority vote in the Senate, thus avoiding a filibuster.
Not all Democrats agree with the 28% rate, however. Sen. Joe Manchin, D-W.Va., whose support will be necessary in a Senate that's split evenly along party lines — with Vice President Kamala Harris as the tie-breaking vote — said Monday he’d prefer a smaller increase, to 25%.
On Monday, White House press secretary Jen Psaki said Biden called for increasing the corporate tax rate to 28% because he "felt it was responsible to propose a way to pay for his proposal."
Psaki said the administration expected to discuss with lawmakers how to finance the package and Treasury Secretary Janet Yellen held a briefing with House Democrats on Tuesday.
"There will be different ideas for tax proposals," Psaki said. "That will all need to be weighed by a range of questions, including — with Congress and with leaders in Congress and outspoken members in Congress — about whether it should be paid for, over what period of time, how much should be paid for, what the options are for paying for it."
Many Democrats have expressed support for increasing the corporate tax rate.
Rep. Don Beyer, D-Va., chairman of the Joint Economic Committee, said 28% was "a prudent compromise" that "moderates and progressives would be wise to support."
He disagreed with Republicans who argue U.S. businesses cannot compete globally at that rate.
"The rate was significantly higher from the post-WWII 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.
Rep. Earl Blumenauer, D-Ore., once a proponent of raising the gas tax to pay for infrastructure, told The Hill that raising the corporate tax rate is a better option.
"The gas tax is fast declining in its effectiveness and opposition is increasing," he said in a statement Tuesday. "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."
Three Democrats on the Senate Finance Committee proposed changes to raising taxes on multinational corporations that differed in some ways from [the] Biden’' plan. One example is the Democrats' call for modifying international provisions in Trump's tax law rather than scrapping the provisions entirely, as Biden suggested.
Senate Finance Committee Chairman Ron Wyden, D-Ore., progressive Sen. Sherrod Brown, D-Ohio, and centrist Sen. Mark Warner, D-Va., said their proposal was aimed at getting full Democrat support.
"This is about getting all 50 Senate Democrats on board," Wyden said on a call with reporters Monday.
Biden proposed his infrastructure package as a follow-up to a $1.9 trillion coronavirus relief package signed into law last month.
Some Democrats disagree with Biden's plan for other reasons.
Progressives don’t think Biden's plan goes far enough. Democrats from high-tax states, meanwhile, want to undo the $10,000 cap on the state and local tax — also known as SALT — deduction imposed by Trump’s 2017 law.