Biden backs down from corporate tax hike as infrastructure negotiations continue

President Joe Biden this week continued to pursue a path toward advancing his multitrillion-dollar infrastructure spending package.

In a move that surprised many observers, he offered a compromise to Republicans that included keeping in place the tax cuts passed by former President Donald Trump in 2017.

Infrastructure negotiations continue

With a price tag of nearly $2 trillion, a major point of contention between the two parties has been how the proposal would be funded.

The president’s original plan included tax increases on corporations and wealthy Americans. Specifically, he favored hiking the corporate tax rate from 21% to 28%, undoing Trump’s tax breaks.

Congressional Republicans were adamantly opposed to the idea and countered with an infrastructure plan worth nearly $1 trillion that would have been partially funded by leftover funding from COVID-19 relief legislation.

Biden and Democratic lawmakers made it clear that the GOP proposal was a nonstarter.

Over the past week, Biden has been busy negotiating with U.S. Sen. Shelley Moore Capito (R-WV), her party’s lead negotiator on infrastructure. It was during these negotiations that the president made his notable counteroffer.

Both sides offer compromises

He affirmed that he would be willing to forego the corporate tax rate increase, reportedly suggesting other funding methods including increased tax enforcement.

The prospect of raising taxes has long been a central complaint among GOP legislators, as Senate Republican Leader Mitch McConnell (R-KY) asserted in March.

“It’s like a Trojan horse,” he told reporters at the time. “It’s called infrastructure, but inside the Trojan horse it’s going to be more borrowed money and massive tax increases on all the productive parts of our economy.”

As for the specifics of the infrastructure plan itself, however, a fundamental disagreement between the parties appears to persist despite the robust and ongoing negotiations. Talks are set to resume between Biden and Capito next week.

White House press secretary Jen Psaki provided an update without offering many specifics about the root of the impasse, explaining: “The president expressed his gratitude for her effort and goodwill, but also indicated that the current offer did not meet his objectives to grow the economy, tackle the climate crisis, and create new jobs.”

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