Congressional Update: New Tax Changes, Infrastructure Talks, Transportation Proposal
In conjunction with the President’s Budget request, the U.S. Department of the Treasury released its “Greenbook” detailing the Administration’s tax proposals.
The proposals would increase the top marginal tax rate for individuals from 37 percent to 39.6 percent; raise the corporate tax rate to 28 percent (from 21 percent); tax capital gains as ordinary income at the increased rate of 39 percent; double a minimum tax on multinational corporations to 21 percent and require companies to calculate that tax on a country-by-country basis; and impose a 15 percent minimum tax on large companies’ book income, which companies use to report profits to shareholders.
The President’s proposal received immediate pushback from Congressional Republicans and some moderate Democrats. Even so, the President’s ability to institute his tax proposals will largely depend on the willingness of moderate Democrats to support a partisan package advanced via reconciliation.
Overall, Washington Democrats have a strong desire to advance some form of the President’s proposed tax increases. While the effort could require additional time, perhaps stretching to early fall, tax increases will likely pass in a moderated form this year.
Discussions on an infrastructure plan and the President’s tax proposals will dominate Washington throughout the summer months, likely setting the stage for action when Congress returns to Washington after Labor Day.
During a meeting with U.S. Senator Capito (R-WV) on June 2, President Biden reportedly softened his stance on the proposed 28 percent corporate tax hike and instead offered a 15 percent corporate tax floor to offset an infrastructure deal. Read more here.
President Biden also supported enhancing tax enforcement on corporations and signaled a willingness to repurpose $70 to $75 billion in COVID-19 relief funds.
White House Press Secretary Jen Psaki clarified the President is open to repurposing pandemic relief funds passed during the previous administration, and not funds from the American Rescue Plan.
Republicans are reportedly considering offering the White House another counteroffer on infrastructure. Last week the GOP unveiled a $928 billion counteroffer.
U.S. Senate Minority Leader McConnell (R-KY) stated he had spoken to Senator Capito (R-WV) after her meeting with the President, and he believes a $1 trillion infrastructure deal could be reached.
Surface Transportation Proposal
On the U.S. House side, House Transportation and Infrastructure (T&I) Committee Chair DeFazio (D-OR) unveiled the INVEST in America Act, a five-year $547 billion surface transportation reauthorization bill.
The bill incorporates many of the priorities laid out in the American Jobs Plan, such as investments in climate-friendly transportation like transit and electric vehicles.
The Committee also released a press release with additional resources. Included in the release, Republican Committee leaders issued the following joint release:
“The Majority’s new ‘My Way or the Highway Bill 2.0’ doubles down on the same mandates, restrictive policies, and costly diversions of infrastructure resources that led to last year’s failure to provide long-term investments in America’s roads and bridges. Instead of working with Republicans to find common ground on a bill that could earn strong bipartisan support – something our Senate counterparts did successfully last month – this bill moves even further to the left to appease the most progressive members in the Majority’s party.”