US President Joe Biden said last night he is open to compromise on his $2tn (£1.45bn) infrastructure plan amid fiery criticism from businesses over a proposed $2.5tn increase in corporate taxes.
Biden faced furious backlash from Republicans, large corporations and members of his own Democratic Party to elements of the proposal he laid last week including major tax hikes for businesses.
The largest share of funding for his plans to turbocharge the US economy would come from an increase in the corporate tax rate to 28 per cent, up from the 21 per cent levy set by then-President Donald Trump’s 2017 tax cut.
“I’m willing to negotiate that,” he told reporters. “But we’ve got to pay for this.”
US Chamber of Commerce chief policy officer Neil Bradley argued that the need for infrastructure was no excuse for passing “tax hikes that will hurt American businesses and cost American jobs.”
Biden said the tax hikes would be aimed at companies who contribute little to nothing in federal taxes.
“I’m not trying to punish anybody, but damn it — maybe it’s because I come from a middle-class neighbourhood — I’m sick and tired of ordinary people being fleeced,” he said.
It comes as the Financial Times today reports that Biden has put together a plan for a new international taxation system for the profits of large multinationals.
The plan would see multinational corporations pay tax to individual governments for the sales they make in those countries.
G7 countries have been trying to implement a global taxation system of this kind for years, with large tech companies like Amazon and Facebook a particular focus.
Any change in how the profits of multinationals are taxed must be done through the OECD.
Chancellor Rishi Sunak has said that one of his goals this year while the UK holds the G7 presidency is to implement a global tech tax.
Amazon chief Jeff Bezos said on Tuesday that he supports raising the US corporate tax rate as part of the President’s ambitious plans.
Biden’s latest financial package will look to pour billions of government investment into the US economy to help the country recover from the pandemic.
“It is the single largest investment in American jobs since World War II, and it is a plan to put millions of Americans to work to fix what is broken in our country,” Biden said in a speech yesterday.
The President has laid out plans for new roads and bridges, retrofitting homes, expanding broadband internet access, financing US manufacturing and building high-speed rail over the next eight years.
The plans to raise $2.5trn over 15 years have been dubbed the “Made in America Tax Plan” by the Treasury Department.
The proposals must be approved by Congress to be written into law, with opposition expected on both sides. Most expect the White House and business groups to compromise on a 25 per cent corporate tax rate.