Axios
The universe of Democratic senators concerned about raising the corporate tax rate to 28% is broader than Sen. Joe Manchin, and the rate will likely land at 25%, parties close to the discussion tell Axios.Why it matters: While increasing the rate from 21% to 25% would raise about $600 billion over 15 years, it would leave President Biden well short of paying for his proposed $2.25 trillion, eight-year infrastructure package.Stay on top of the latest market trends and economic insights with Axios Markets. Subscribe for freeBiden’s plan to increase the rate U.S. multinationals pay on their foreign earnings from 10.5% to 21% is less controversial and stands a better chance of remaining intact in the final legislation. That would raise an additional $700 billion.But corporate lobbying groups are preparing for a long-term battle over both rates.The Business Roundtable launched an advertising campaign last week and released a survey of 178 CEOs discussing how the proposed changes would affect their company’s competitiveness.The big picture: The White House hasn’t publicly backed away from the president's proposed 28% rate but indicated it’s willing to find a compromise to pay for his spending plans.Democrats close to the White House expect Biden will accept 25% and pocket it as a political win.President Trump lowered the rate from 35% to 21%.Driving the news: A collection of 10 senators from both parties — the so-called Group of 20 — is working to find a compromise on what to include in an initial infrastructure package and how to pay for it.“If we come together in a bipartisan way to pass that $800 billion hard infrastructure bill that you were talking about, that I've been urging, then we show our people that we can solve their problems,” Sen. Chris Coons (D-Del.) said on "Fox News Sunday."Sen. Susan Collins (R-Maine) has crystalized the G-20’s challenge by breaking it down into three issues: scope, size and pay-fors.“It is much easier to come up with appropriate pay-fors and bipartisan agreement if we're talking about a more focused package that truly is centered on infrastructure,” she said last Thursday.Between the lines: While Manchin (D-W.Va.) has made clear his preference for a 25% rate, he’s far from alone.Democrats who've privately hinted they may be uncomfortable with going to 28% include Sens. Tim Kaine and Mark Warner of Virginia, Kyrsten Sinema of Arizona and Jon Tester of Montana.The Democratic dynamic is similar to the one about increasing the minimum wage to $15 an hour, which was ultimately rejected by eight Senate Democrats.Some of them talked about something closer to $11.Go deeper: There’s similar sentiment in the House, where moderates also are opposed to increasing taxes too much, Axios had reported."I think that 25% is fine," Rep. Scott Peters (D-Calif.) said.Be smart: Democrats view the debate about the corporate rate as a litmus test for Republican interest in bipartisanship during the Biden era.If they can find a middle ground, they hope to work on other issues.Many are skeptical, though, even as Republicans say infrastructure spending is badly needed.A failure to reach consensus here would only fuel calls to use budget reconciliation to ram through other spending plans.Like this article? Get more from Axios and subscribe to Axios Markets for free.
