US President Joe Biden has offered a significant concession to the Republicans, scrapping his proposed corporate tax hike during his session. Unfortunately, this relief move has come in lieu of him trying to hammer out a massive infrastructure deal.
The Democratic Party President initially sought to raise the corporate tax as high as a freaking 28% percent (there is no GST reference here, do not read as such) from the already set 21%. Still, the Republicans opposed the same, and the new proposal, which has been floated now, has a proposed percentage of 15.
This new proposal aims to allow and encourage all the companies to pay taxes with the levied percentage. Tax legislation passed by the Republicans led by former US President Donald Trump set the corporate tax at 21% in 2017.
In the press conference, White House spokeswoman Jen Psaki asserted that the new proposal “should be completely acceptable” to Republicans that wanted to leave 2017 corporate tax cuts in place and were opposing the recent hike of the 28%. Psaki further exclaimed that they are ” receptive to supplementary options” as long as they do not increase taxes on people making less than $400,000 a year. In return, Republicans will have to agree on at least $1 trillion in new infrastructure spending.
Senate Minority Leader Mitch McConnell, in an appearance in Kentucky on Thursday, said that Republicans are still hopeful of coming to an agreement and that the main point of discussion was maybe one trillion dollars in spending.
This move comes in the rouse of the multinational companies evading the US Tax by following loopholes in the system. They show profits of millions but shift their liabilities to more tax-friendly or tax heaven countries to evade the corporate tax in the US. The minimum corporate tax would allow companies like Amazon, Pfizer, McDonald’s, FedEx, and many others who have paid low taxes over the years.
Biden had earlier made a $1.7 trillion infrastructure proposal to Republicans. Taking back a 28% corporate tax rate increase from the cards would not allow collecting of what the Treasury Department estimates is $857.8 billion in revenue over a decade. The minimum tax proposal would provide the Treasury with about $140 billion over a decade.
$75 billion from unused COVID-19 funds will also be used for the infrastructure plan. The remainder of funds which was earlier calculated from 28% corporate tax, would come from other proposals, including ending certain fossil fuel subsidies and a new fee on commercial truck mileage.
Psaki also stated the 28% hike is ‘not’ out of the discussion and hinted that the Biden-led proposal might change in the future, and the hike in taxes could be an imminent step in the future even if all accept the minimum proposal.
This announcement also had some consequences on the stock market. The tech giants like Amazon, Qualcomm, and Micron saw a downfall on Thursday since people are already assuming lower profits after increased payment of taxes even with a lower percentage.