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Biden backtracks on promise to increase taxes on wealthy and corporations: Report

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
The sun sets behind the US Capitol building in Washington, US, October 6, 2021. (Reuters photo)

The White House told Democratic lawmakers on Wednesday that a proposed hike in US corporate taxes is unlikely to make it into their signature social spending bill, according to a congressional source familiar with the discussions.

President Joe Biden's plans to hike the corporate tax rate to 28% from 21%, a key campaign promise, are likely to be one of the steep concessions he makes to steer his economic revival package through Congress, the White House disclosed in the private meeting with top Democrats.

"There is an expansive menu of options for how to finance the president's plan to ensure our economy delivers for hardworking families, and none of them are off the table," said White House spokesperson Andrew Bates.

Biden, his aides and congressional leadership are racing to close a deal as soon as this week on a set of tax hikes they hope will fund more than $1.75 trillion over a decade in programs ranging from childcare to eldercare, healthcare, affordable housing and climate change mitigation.

They have no margin for error because Democrats hold only narrow majorities in the House of Representatives and Senate. Republicans oppose the legislation.

"The president knows that he's not going to get everything he wants in this package," White House spokesperson Jen Psaki told reporters on Air Force One. "Nor will any member of Congress, probably, and that's what compromise is all about."

The original price tag for the social spending bill was $3.5 trillion.

Democrats hope to pass the measure in the Senate through a "reconciliation" process that requires support by only a simple majority rather than the 60 votes needed for most legislation in the evenly split 100-member chamber. Democratic Vice President Kamala Harris holds the tiebreaking vote.

Biden, who framed the 2020 election against Republican then-President Donald Trump as one between working-class Scranton, Pennsylvania, and Manhattan's Park Avenue, pitched the tax hike as an effort to make sure the wealthy and corporations pay their fair share. Trump and congressional Republicans cut corporate rates to 21% from 35% in 2017.

After taking office in January, Biden paired the tax hike with a mix of programs he has argued will put the United States on a more sustainable economic footing to compete with China, from universal pre-kindergarten to dental benefits for seniors and incentives to encourage a shift to low-carbon energy sources.

'Everybody ought to be paying something'

Business groups and Republicans have fought the measures, arguing they will hamper the economy's recovery from the COVID-19 pandemic.

"When I ran for president, I came back to Scranton," Biden said on Wednesday on his first trip back to his birthplace since Election Day last November. "I resolved to bring Scranton values to bear, making fundamental shifts in how our economy works for working people, build the economy from the ground up ... and not from the top down."

Top Democrats may now put on the table alternate financing proposals for the bill that have been discussed for weeks, including imposing new levies on stock buybacks and business partnerships, according to a person familiar with the matter.

Kyrsten Sinema, a key swing-vote Democrat who has expressed the most concern about tax hikes, may be amenable to other measures that only raise rates for highly profitable large corporations paying next to nothing in federal taxes under current rules, according to Senate colleague Elizabeth Warren.

“Our problem is partly about too low a rate at the top, and obviously some Democrats disagree,” Warren, a Democrat, said on CNN. “But I think all the Democrats agree, by golly, everybody ought to be paying something.”

The S&P 500 (.SPX) closed 0.4% higher after the news about the White House's private comments was first reported by the Washington Post. After-hours trading in the US stock index trended 0.3% higher.

(Source: Reuters)


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