The backlash against effort to raise taxes is ‘almost religious fervor,’ says Commerce secretary

One of President Biden’s oft-repeated promises from his election campaign and his first year in office is to raise the corporate tax rate.

The tax rate was 35% until it was lowered to 21% by the Tax Cuts and Jobs Act 2017. That was too much, Biden and other Democrats have said time and time again. The Biden campaign promised to halfway back it to 28%, and the numbers that came out that year often fluctuated in the mid-20s.

The United States has the 85th highest corporate tax rate in the world (with a combined federal and state statutory rate of 25.77%). Countries like Ireland – with a corporate tax rate of 12.5% ​​- are known for their very business-friendly tax environment, while many developed regions like Asia (with an average tax rate of 20.06%) and Europe (19.99%) are also known for having lower cost options for Companies.

With opposition to tax hikes from both Republicans and moderate Democratic senators like Kyrsten Sinema (D., Ariz.), The latest twist is that a higher corporate tax is likely to drop out of the stimulus package entirely.

The White House reportedly told Democratic lawmakers this week that the proposed increase was unlikely to be included in the final bill.

The ever-evolving plan seems likely to leave the rate at 21% and instead focus on other things like a corporate minimum tax and increases for wealthy individuals to settle the bill, which is likely to include less than $ 2 trillion in new expenses.

The opposition of some lawmakers – all Republicans as well as some moderate Democrats – to raising taxes on wealthy people is “almost religious fervor,” said Commerce Secretary Gina Raimondo at the Milken Institute Global Conference 2021 this week.

The story goes on

President Joe Biden speaks at an event at the Electric City Trolley Museum in Scranton on Wednesday. (Spencer Platt / Getty Images)

Although no one wants corporate taxes to make companies competitive, Raimondo said she heard from many business leaders that a corporate tax rate of 25% and 26% is “absolutely within the range of what they could live with.”

“We have to come to our senses”

Raimondo said “at some point we have to come to our senses” in tax policy just to pay for the legislature’s priorities.

Corporate taxes may be off the table, but other sources of income such as a corporate minimum tax, tax increases for the rich, and possibly a more modest version of the wealth tax advocated by Senator Elizabeth Warren, are reportedly still being debated.

While speaking with Andy Serwer of Yahoo Finance, Raimondo turned away from corporate taxes and turned to these other potential sources of income through a corporate minimum tax.

“I heard almost unanimously,” she said of her conversations with business leaders, “that they would not oppose income tax increases for high earners. They understand that we need the income to make investments. “

Ben Werschkul is a Washington, DC-based writer and producer for Yahoo Finance.

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