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To pay for his proposal for infrastructure spending, President Joe Biden wants to raise the federal tax rate on corporations from 21% to 28%, which is in line with a promise he made on the campaign trail.
Prior to 2017, when President Donald Trump signed a tax overhaul measure, the corporate tax rate was 35%. Trump's law lowered the rate to 21%, so Biden's proposal would move it half way back to where it was.
Republicans have argued that raising the tax to 28% would hurt companies' competitiveness and put a damper on job creation. Some congressional Republicans have floated an alternative — paying for a smaller infrastructure package through user fees, such as a hike in the gasoline tax.
Further complicating passage of Biden's proposed 28% rate is that Democratic Sen. Joe Manchin of West Virginia has already said he opposes any new rate higher than 25%. In the current 50-50 Senate, Manchin's vote would almost certainly be necessary for passage.
Biden has expressed openness to signing a bill with a rate lower than 28% if a mutually agreeable measure can be negotiated.
For these reasons, enactment of a 28% corporate tax rate faces significant legislative obstacles. However, the increase has become a key element of Biden's infrastructure proposal, which in turn is a major legislative priority for the White House.
We rate this promise In the Works.
PriceWaterhouse Coopers, "White House lists corporate tax offsets for Biden infrastructure plan," March 2021
Wall Street Journal, "Top Republican Says Senate GOP Could Be Open to Smaller Infrastructure Bill," April 18, 2021
CNBC, "Biden says higher corporate tax won't hurt economy; Manchin opposes 28% rate," April 5, 2021