Sen. Chris Coons (D-DE) said Wednesday that Congress is more likely to approve a smaller infrastructure plan and to not raise corporate taxes to pay for it, given a small number of Democrats who have come out against the $2.3 trillion proposal by President Joe Biden.
Coons discussed the options with Punchbowl News, including possible areas of compromise like closing corporate tax loopholes or a smaller corporate tax increase than the one proposed by Biden, which would set the rate at 28%.
“In the choice between raising taxes significantly and simply looking at each other and saying ‘we need a robust recovery,’ I think it’s more likely we’ll have a package that is not paid for, and that is less robust but still putting hundreds of billions of dollars into infrastructure,” he continued.
Republicans have complained that a corporate tax increase would drive companies overseas and that most of the huge bill was not direct infrastructure spending, but included Green New Deal-like provisions such as electric cars and alternative energy investments.
Republicans want smaller bill
If a smaller bill is agreed upon, Republicans may be willing to pay for some of it with a gas and mileage tax, Coons suggested. Some of the bill could also be financed, he said.
This year’s deficit is expected to be over 100% of GDP for the first time since World War II, but most of the debt is due to coronavirus stimulus spending to keep the economy going while shutdowns occurred.
Biden has said repeatedly that the bill would probably change as it progressed through Congress, and said he is open to “good faith negotiations.”
But here’s what we won’t be open to. We will not be open to doing nothing. Inaction simply is not an option,” he said.
Tax increases moving forward
Meanwhile, Biden has put forth a plan to completely pay for his original $2.3 trillion proposal with new taxes that the Budget office expects to raise $2.5 trillion over 15 years.
Treasury Secretary Janet Yellen decried Republican opposition to the increases, saying that the U.S. shouldn’t get involved in a “race to the bottom” on corporate tax rates but should compete in other areas.
“America will compete on our ability to produce talented workers, cutting-edge research and state-of-the art research, not on whether we have lower tax rates than Bermuda or Switzerland,” Yellen said.
In recent weeks, Yellen has suggested a global minimum corporate tax that would involve North America and Europe, but Republicans said that companies would then avoid those locations for building factories and headquartering their operations.