Biden counter-offers on tax hike to Republicans to pay for infrastructure

The president introduced a menu of tax increases that would not reverse any changes Republicans made in 2017.

Biden%20counter-offers%20on%20tax%20hike%20to%20Republicans%20to%20pay%20for%20infrastructure
source: https://ibb.co/D58LpGh

President Joe Biden offered Senate Republicans the option of a tax hike he initially proposed to pay for a comprehensive infrastructure plan, part of his effort to find a bipartisan settlement, according to two sources on the proposal. Gone.

In a meeting on Wednesday with Sen. Shelley Moore Capito, the leading Republican negotiator, Biden insisted that tax hike pay for most of the plan but indicated he was prepared to support a smaller increase than initially requested. .

Biden's earlier proposal called for raising the corporate tax rate from 21 percent to 28 percent as the primary mode of payment for the infrastructure bill. This was rejected by Republicans and does not appear to have unanimous Democratic support.

On Wednesday, Biden presented Capito with a menu of tax increases that do not reverse anything in the 2017 tax cut bill. Senate Minority Leader Mitch McConnell and other Republicans have said they consider the tax cuts a signature legislative achievement and are unwilling to undermine them to pay for infrastructure.

A source familiar with the meeting said Biden issued a 15 percent minimum corporate tax and stricter enforcement on the highest earners. The source said the proposal is part of an effort to prevent corporations from using tax breaks and loopholes to effectively slash their tax burden.

Highway workers repair a hole resulting from the July 5, 2019 earthquake, near Ridgecrest, Calif., on July 6, 2019. Robin Beck / AFP via Getty Images File

The list also includes eliminating the "step-up basis," which addresses the tax value of inherited properties, and eliminating some fossil fuel incentives in the tax code.

Biden's goal at Wednesday's meeting was to try to convince Republicans that they can only pay for a bigger infrastructure package by closing the loophole, paying people and corporations the taxes they already have. and keep the minimum corporate tax rate below. The rate of the 2017 law, an administration official said.

While Biden still thinks the corporate rate should be higher, he understands it's a redline for Republicans, so he tried to make the case that his plan could be paid for in other ways, the official said.

The official said Biden also emphasized that he wants to see a significant level of new spending based on $400 billion on infrastructure over five years, rather than redirecting money to other programs.

McConnell quickly shrugged off the president's proposal, rejecting any tax increases, saying at an event in Kentucky on Thursday that raising the tax would "create an enormous amount of controversy."

"I don't think it's going to appeal to members of my party, and I think it's going to be a hard sell for Democrats," McConnell said, "so my advice to the president and the administration, let's find a deal. Access infrastructure that is small, but still important and fully paid for."

White House Press Secretary Jen Psaki said that before the meeting, Biden "extended a thorough review of all the tax reforms he proposed," and said he has long supported a 15 percent minimum corporate tax.

“He sees what might be the way forward with his Republican allies on this specific conversation,” he said, emphasizing that Biden is “absolutely not” dropping his support for raising the corporate rate to 28 percent. Were.

"It's a way for him to identify pieces he's been a supporter of for a long time" that "not violate" the GOP's red line of not rolling back the 2017 tax law in the infrastructure talks, he said. Will do

Biden also told Capito that he would like to see a Republican proposal that includes $1 trillion in new money. Biden had proposed $1.7 trillion in new spending, which Republicans counted with $250 billion in new spending, and the rest of the $928 billion package included largely unspent COVID-19 relief funds.

West Virginia's Capito withdrew the proposal Wednesday evening to her five-member Republican negotiating team, which includes Sens. John Barrasso of Wyoming; Roy Blunt of Missouri; Roger Wicker of Mississippi; Pat Tommy of Pennsylvania; and Mike Crapo of Idaho.

According to one source, throughout the process, Capito briefed McConnell, who has a great influence on the direction of his conference and talks.

McConnell on Thursday specifically rejected the idea of ​​taxing inherited assets at a capital gains rate calculated at the time of death rather than at the time of purchase, saying that "everyone running a small business or family farm" Sends coolness to someone's heart."

Capito and Biden are expected to speak again on Friday, and Republicans are considering a counter-offensive to present to the president.

But it seems that time is running out. Administration officials have said they want to see a "clear direction" on the legislation when Congress returns to session next week, but Saki said Monday is not a hard deadline for talks.

"It has been a good discussion and ongoing discussions where we are working to find areas of agreement," Saki said on Thursday. "We see many paths ahead."

Most Democrats are eager to close talks with Republicans and focus on passing the measure through a budgetary process called conciliation that requires a simple majority to pass the Senate.

But Sen. Joe Manchin, D-WVA, also a required vote in the reconciliation process, has yet to say he would support a partisan process and has pushed for a bipartisan bill. He's working with a different bipartisan group of senators and members of the House to come up with a proposal, should the talks between Republicans and Biden fall apart.