April 12, 2021

President Biden Says He’s Not Wedded To Corporate Tax Plan

When President Joe Biden offered the first part of his infrastructure spending plan two weeks ago, he said it would be financed in part by raising the top U.S. corporate income tax rate from 21 percent to 28 percent. Last week, the president said he would consider reducing his corporate tax increase, but that “doing nothing” was not an option. He also said he would invite Republican lawmakers to the White House to discuss potentially changing the proposal.

While GOP lawmakers and business trade associations oppose the tax increase, the president also faces opposition from his own party. Sen. Joe Manchin (D-W.Va.) said he will not vote to increase the corporate tax rate to 28 percent, but that he may be comfortable raising the levy to 25 percent.

As President Biden indicated he is open to negotiation, his Treasury Department released details of the tax plan. Specifically, the outline calls for:

  • Raising the corporate tax rate to 28 percent from its current 21 percent;
  • For profitable companies that earn $2 billion or more annually, placing a 15 percent minimum tax on the income corporations report to investors; and
  • Increasing the tax rate on companies’ foreign earnings from 10.5 percent to 21 percent.

Also last week: the U.S. Treasury Department sent 135 countries a proposed model for taxing multinational corporations. The plan would have the world’s largest businesses pay taxes to their national government based on local sales, regardless of their physical presence in a country, according to the documents.