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Politics Analysis: White House, U.S. companies could agree on 25% tax rate, officials, business groups say

01:05  08 april  2021
01:05  08 april  2021 Source:   reuters.com

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The Chamber of Commerce agrees that America’ s failing infrastructure needs to be addressed, but disagrees with the significantly large tax increase that will be required to pay for it. In a press release , the Chamber of Commerce called for removing the tax hike in the infrastructure plan. “We strongly oppose the general tax increases proposed by the administration which will slow the economic recovery and make the U . S . less competitive globally – the exact opposite of the goals of the infrastructure plan.”

Manchin said he would be in favor of closing tax “loopholes” that benefit the wealthy and could support an increase in the corporate rate to 25 %, which he said is the global average. He plans to continue working with a group of Democratic and Republican senators to craft a bipartisan bill, Manchin said . Democrats are weighing in on other aspects of the Biden economic plan as well. Also on Monday, three top Senate Democrats released a proposal to overhaul the U . S . international tax system that could shape the outcome of the global tax revamp that the White House is pursuing to fund infrastructure

By Jarrett Renshaw

Joe Biden wearing a suit and tie: President Biden speaks about jobs and the economy from the White House in Washington © Reuters/KEVIN LAMARQUE President Biden speaks about jobs and the economy from the White House in Washington

(Reuters) - President Joe Biden has championed raising the U.S. corporate tax rate to 28% from 21% as the main way to fund his $2 trillion infrastructure plan, but few people in Washington, including inside the White House, really think the rate will land there.

Biden made it clear on Wednesday that he is open to compromise, after a reporter asked if he would be willing to agree on a tax rate below 28%.

"I'm willing to listen to that, I'm wide open to it," Biden said.

Reuters interviewed more than a dozen corporate and White House officials engaged in the infrastructure push. Most expect the White House and business groups to compromise on a 25% corporate tax rate - a level neither side would have chosen, but both can live with.

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Commerce Secretary Gina Raimondo said Wednesday that businesses and lawmakers should come to the bargaining table, noting that there could be room to negotiate on the rate and timeline. “There is room for compromise,” Raimondo said at the White House briefing. “What we cannot do, and what I The infrastructure investments would increase the level of GDP in 2024 by 1.6%, according to estimates by Moody' s Analytics. But the proposal has also drawn criticism from business groups such as the U . S . Chamber of Commerce and the Business Roundtable, which argue that higher taxes would hurt

Democrats and White House officials say that their goal is to ensure companies pay their fair share and that they do not move jobs and profits abroad to avoid paying taxes in the United States. But some tax experts, along with large business lobbying groups , say the proposals could hobble American “The plan retains the now-familiar international tax regime,” he said , “but proposes to reform several lopsided tax breaks that provide rich benefits for international corporations without much in the way of investment or jobs in the U . S .” But Republicans, the leading business lobbying group and some tax

"We don't like it, but we expect to be at 25 percent," a lobbyist at a top U.S. energy firm said, requesting anonymity. "If so, we are going to consider that a win."

The U.S. corporate tax rate dropped to 21% from 35% after the 2017 tax cut pushed by former President Donald Trump and his fellow Republicans, but many big U.S. companies pay much less. Increasing what companies pay into the more than $4 trillion federal budget is an important part of Democrat Biden's plan to restructure the U.S. economy to reduce inequality and try to counter China's rise.

U.S. multinational companies including Alphabet Inc's Google, Facebook Inc and Merck & Co are among several that have been adept at reducing their taxes, tax and legal experts said.

Amazon.com Inc supports a hike in the corporate tax rate https://www.reuters.com/article/idUSKBN2BT30J as part of an infrastructure overhaul, Jeff Bezos, chief executive of the largest U.S. retailer, said on Tuesday. Biden said last week that Amazon was one of 91 Fortune 500 companies that "use various loopholes where they pay not a single solitary penny in federal income tax," in sharp contrast to middle class families paying over 20% tax rates.

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White House press secretary Jen Psaki told reporters the Democratic president was open to discussions with Republicans and Democrats about how to fund the proposed investments. Asked if the administration had analyzed the cost of agreeing to a lower corporate tax rate of 25 %, the highest Manchin says he would accept "There will be different ideas for pay-fors, there will be different ideas for tax proposals. That will all need to be weighed … with leaders in Congress." Focus in reducing inequities. The U . S . Chamber of Commerce, the largest U . S . business group , last month called

Along with boosting the corporate income tax rate to 28% from 21%, the White House plan also calls for a complete revamp of how U . S . companies pay taxes on foreign profits. Legislation has not yet been written and months of negotiations loom, but tax experts have suggested the proposals will likely hit technology and pharmaceutical companies particularly hard -- the two biggest sectors in the S &P 500 Index. Goldman Sachs Group Inc. strategists calculated last month that higher corporate taxes could cut S &P 500 earnings growth by as much as 9% in 2022 if Biden’ s 2020 plan were to be fully


Video: White House proposes raising corporate tax rate to 28% from 21% (FOX News)

Biden's infrastructure and investment package includes roads and bridges and funding for affordable housing and elder care workers, among other items.

In addition to raising the corporate tax rate, the White House is pushing a minimum U.S. and global tax for companies, and increasing enforcement of tax laws, Treasury Secretary Janet Yellen said on Wednesday.

OPPOSITION

Trade groups, including the U.S. Chamber of Commerce, and U.S. Senator Joe Manchin, a Democrat from West Virginia who is a moderate on some issues, have said the 28% rate is too high. However, Manchin, whose support is crucial to any bill passing in the 50-50 Senate, said he could support a rate of 25%.

The White House knew that proposing an increase to 28% would face opposition, including from some Democrats. It is prepared to discuss alternatives - including setting the rate to 25%, three administration officials familiar with the discussions told Reuters.

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Business groups and Republicans criticized that rate . Biden said he is willing to compromise on tax rate . Commerce Secretary Gina Raimondo joined the daily White House press briefing on Wednesday to argue 'the fact of the matter is the corporate structure, today is broken.' 'Many, many companies - large profitable companies - pay no corporate taxes . So I'd like to think we can all agree that it needs to be improved, level the playing field, close the loopholes and have a have a discussion around how we do this together to improve competitiveness,' she said .

But if companies pay lower rates in a particular country, their home governments could "top-up" their taxes to the agreed minimum rate , eliminating the advantage of shifting profits to a tax haven. The Biden administration has said it wants to deny exemptions for taxes paid to countries that don't International tax experts say that is the thorniest issue. Other items still to be negotiated include whether industries like investment funds and real estate investment trusts should be covered, when to apply the new rate and ensuring it is compatible with the 2017 U . S . tax reforms aimed at deterring

Unlike the coronavirus pandemic relief bill passed by Congress and signed into law by Biden in mid-March, where expiring unemployment benefits created a sense of urgency, the White House believes the infrastructure plan can be debated, and expects Congress will play a more pivotal role.

In 2013, then Vice President Biden and President Barack Obama proposed cutting the corporate tax rate to 28% from 35% and to 25% for manufacturers, but Republicans in Congress blocked the plan https://www.reuters.com/article/us-usa-obama/obama-offers-grand-bargain-on-corporate-tax-rate-infrastructure-idUSBRE96T0F820130730. So far, Republicans have voiced no support for raising corporate taxes, and criticized the plan for being too large.

"Debate is welcome. Compromise is inevitable. Changes are certain," Biden said during a speech at the White House on Wednesday. He said he would soon invite Republican lawmakers to the White House and that the administration is "open to good ideas and good-faith negotiations."

Increasing the corporate tax rate to 28% from 21% is expected to generate $850 billion, a significant chunk of Biden's proposal, according to the non-profit Committee for a Responsible Federal Budget public policy organization.

At 25% a little under $500 billion would be generated, the committee said, forcing Democrats to search for additional revenue streams or cut spending.

That effort will be made more complicated by Biden’s campaign pledge to not raise taxes on any American earning less than $400,000, making items such as raising the gas tax or establishing a per-mile tax politically toxic.

"It’s a very difficult tax pledge and promise," said the committee's president Maya MacGuineas.

(Reporting By Jarrett Renshaw; Editing by Heather Timmons and Grant McCool)

Biden administration widens digital tax push to target world’s 100 largest companies .
The U.S. proposals were sent to other countries involved in ongoing tax talks overseen by the Organization for Economic Cooperation and Development.Washington’s pitch aims to redirect years of fraught negotiations that have centered on finding ways for countries to increase taxes on Big Tech companies including Google and Facebook. U.S. officials have pushed back against those plans, and want any root-and-branch overhaul to include both digital and non-digital firms after the U.S. claimed the current plans unfairly target its homegrown companies.

usr: 4
This is interesting!