President Joe Biden says he’s willing to negotiate on both the size and scope of his infrastructure and jobs package, but congressional Republicans are already saying they won’t budge on higher corporate taxes.
The American Jobs Act would spend over $2 trillion to overhaul the nation’s infrastructure by renewing roads and bridges, electrifying transit systems, expanding broadband, boosting rail, and spending billions on home care and housing. The proposal, if signed into law, would be the biggest investment in the nation’s infrastructure in decades.
The Biden administration proposes offsetting the huge cost by permanently increasing the corporate tax rate from 21% to 28%, which is still lower than the 35% rate before the 2017 GOP tax law took effect. Administration officials claim such a tax hike, combined with other steps such as closing tax loopholes, would pay for the package in full in eight years.
But Republicans are lining up against repealing parts of their tax law, which they consider their signature legislative achievement under former President Donald Trump. The tax cuts, they claim, cut unemployment and ignited the economy ― at least before the coronavirus pandemic hit.
“I don’t think there will be any” support among Senate Republicans to undo the 2017 tax law, Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday at a weekly press conference.
Biden’s administration has turned up outreach to congressional offices in recent weeks in hopes of finding bipartisan cooperation on the infrastructure and jobs plan. Cabinet officials have been making calls to GOP senators, and on Monday, the president himself sat down with a group of bipartisan lawmakers at the White House. The discussion was “lively,” according to Sen. Roger Wicker (R-Miss.), but didn’t yield any tangible agreement on how to finance an infrastructure overhaul, the biggest sticking point.
“It would be an almost impossible sell for the president to come to a bipartisan agreement that included undoing that signature law. I did tell him that. He disagrees,” Wicker told reporters afterward.
Other Senate Republicans who are part of a bipartisan working group that had little success negotiating a deal on coronavirus relief earlier this year also panned the idea of financing infrastructure investment by raising taxes on corporations.
“This is the last thing we need at a time when our economy is just starting to recover,” Sen. Rob Portman (R-Ohio) said.
Corporations know better than the government how to spend money, according to Sen. Bill Cassidy (R-La.), another working group member.
“They’re kind of making the case that it makes more economic sense for the government to decide how to spend money to stimulate the economy, as opposed to the market to decide where to spend the money,” Cassidy said.
Cassidy and several other Republicans told HuffPost the 2017 Tax Cuts and Jobs Act dramatically strengthened the economy, but various experts, including those at the Congressional Budget Office, have said the law had only a modest effect on economic activity. The law’s tax windfall spurred corporations to buy back massive amounts of stock.
Some Republicans prefer paying for infrastructure spending in other ways, such as through user fees and gas taxes. The federal gas tax, in particular, hasn’t been raised in nearly 30 years. Such forms of revenue have funded infrastructure projects for decades, but in recent years, the model has failed to adequately sustain federal transportation programs like the Highway Trust Fund. As a result, Congress has had to dip into the federal Treasury to keep it afloat.
“You have electric vehicles coming out more and more that pay nothing into the Highway Trust Fund because they don’t use any gasoline,” Sen. John Barrasso (R-Wyo.) said Monday when asked about the gas tax.
Congressional Democrats and the Biden administration oppose raising the federal gas tax because, they say, it would disadvantage working people who would have to pay more to gas up their cars. They want Republicans to put their money where their mouth is and compromise on other payfors — revenue to offset spending — such as corporate taxes. (One Democrat, Joe Manchin of West Virginia, has already floated a 25% corporate tax rate as a possible option).
Republicans “need to put their counter-proposals on the table. I haven’t even heard of a payfor from a Republican yet,” Sen. Elizabeth Warren (D-Mass.) said Tuesday.
Some Republicans, such as Sens. Josh Hawley (Mo.), Ted Cruz (Texas) and Marco Rubio (Florida), have sought to rebrand the Republican Party as the party of the working class. Hawley and Cruz called on the government to take away Major League Baseball’s exemption from antitrust laws on Tuesday because the league protested a Georgia voting law inspired by Trump’s election fraud lies.
Hawley said he wouldn’t support a higher corporate tax rate to pay for infrastructure, but didn’t rule out higher corporate taxes altogether. He suggested he might be open to a global minimum tax like Biden proposed as part of his infrastructure bill.
“I do think that there needs to be efforts made to make sure that these mega-corporations are actually paying taxes and that they are not using tax arbitrage tax havens and so forth to avoid paying anything,” Hawley said.