Now that he’s checked the $1.9 trillion stimulus package off his “to-do” list, President Joe Biden has shifted gears to his next big focus — infrastructure. Now, both Republicans and Democrats alike agree that America’s infrastructure is overdue for a major upgrade, it’s how to upgrade the infrastructure that is what they cannot agree on.
Keep in mind that infrastructure was also thought to be a priority of President Donald Trump as well, but we didn’t see a major plan go through Congress. Noting this, infrastructure isn’t the slam-dunk that many assume that it is, and this was confirmed in the days after Biden rolled out his $2 trillion proposal on the matter. Again, it wasn’t so much Biden’s proposal that drew the ire from Republicans and a few Democrats, but how he intends to fund the program. Specifically, he wants to raise the corporate tax rate from 21 percent to 28 percent.
The Debate Over a Higher Corporate Tax Rate
As noted, the current corporate tax rate sits at 21 percent, a rate made possible by President Trump’s Tax Cuts and Jobs Act that was signed into law in 2017. In a significant move for corporations, the Act reduced the corporate tax rate from 35 percent. Part of funding this infrastructure plan involves undoing some of that corporate tax cut — a proposal that has fittingly divided politicians down party lines.
Biden claims that raising the corporate tax rate by 7 percent would not hurt the economy and its continued recovery from the COVID-19 pandemic, stating that it would instead hold the wealthy corporations accountable for paying their fair share toward a greater good. On the other side of the aisle, however, there’s the worry that a higher corporate tax rate could harm businesses on a couple of different fronts. One, there’s a worry that it will hamper economic recovery from the pandemic. And two, there’s worry that the United States may become a less attractive option to new businesses. And certainly a higher corporate tax rate would tap into the profits of some of the large corporations that help make the United States tick.
Is a Corporate Tax Hike on the Way?
Right now, this seems unlikely. While a corporate tax increase may eventually come to fruition, it doesn’t make much sense to do it now in the midst of a pandemic. Furthermore, the proposal doesn’t even have full Democratic support. Democratic Senator Joe Manchin, who is one of the more conservative Democrats on Capitol Hill and often a key swing vote, has already publicly stated his opposition to a 28 percent corporate tax rate. Without Manchin’s “yes” vote, this would fall in the evenly split Senate before it has a chance to get to Vice President Kamala Harris for the tiebreaking vote. Manchin did say, however, that he would be open to a more modest increase, such as 25 percent.