GOP senators oppose corporate tax hike as ‘non-negotiable red line’ as they float taxes on drivers to pay for infrastructure

Shelley Moore Capito
Sen. Shelley Moore Capito (R-WV).

  • Sen. Shelley Moore Capito said Republicans were strongly opposed to corporate tax hike.
  • “I think that’s a non-negotiable red line,” she said, and other top Republicans around her agreed.
  • Republicans are drafting an infrastructure plan that may be mostly financed with taxes on drivers.
  • See more stories on Insider’s business page.

Republican Sen. Shelley Moore Capito of West Virginia said that GOP senators won’t budge from their resistance to hiking corporate taxes, a key element in President Joe Biden’s infrastructure plan.

“I think that’s a non-negotiable red line,” Capito told reporters on Thursday of her party’s opposition to increasing corporate taxation.

Other Republican senators at the news conference said they agreed with Capito. The group also included Sens. John Barrasso of Wyoming, Roger Wicker of Mississippi, Deb Fischer of Nebraska, and John Cornyn of Texas.

Democrats assailed the Republican comments. Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, called the red line a “completely unreasonable” position.

“Republicans’ insistence that the most profitable companies in the world shouldn’t contribute a single penny to investments in roads, schools and our clean-energy future is simply not acceptable,” Wyden said in a statement.

A faction of Senate Republicans in recent days appeared to be prepping a $600 billion to $800 billion infrastructure counterproposal to Biden’s $2.3 trillion package. Several lawmakers suggested financing the plan with a vehicle mileage tax on electric vehicles or raising the gas tax.

“I think we still haven’t defined what we mean by infrastructure and what’s going to be included and so how much it’s going to be, we don’t really have an idea,” Sen. Mitt Romney of Utah told reporters on Thursday. “It’s a very early process that we’ve engaged in.”

Still, other Democrats described the $800 billion indicated by Capito as too meager to address the country’s infrastructure needs. “We’re going to do whatever it takes. If it takes $4 trillion, I’d do $4 trillion but we have to pay for it,” Sen. Joe Manchin of West Virginia told reporters on Thursday.

A JPMorgan economic research note on Thursday found that, although the corporate tax rate was higher than the global average before former President Donald Trump’s 2017 tax cut, the US had a lower ratio of corporate tax revenues to GDP dating back to 2000.

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JPMorgan says it’s time for US corporate taxes to catch back up with the rest of the world

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Trump Biden
Presidents Joe Biden (L) and Donald Trump (R).

  • JPMorgan said the US should increase corporate tax rates to catch up to other world economies.
  • The US is more focused than other countries on raising tax revenue from personal income and housing.
  • Even before the 2017 Trump tax cut, it found US corporate tax revenues lower than the global average.
  • See more stories on Insider’s business page.

President Joe Biden kicked off a major debate in early April when he proposed raising the corporate tax rate from 21% to 28% to fund his $4 trillion infrastructure plan. Now JPMorgan has weighed in on the matter and it finds corporate tax revenue is lower in the US than elsewhere, even if the rate is now close to the international average.

And as sentiment appears strong in the US that American corporations don’t “pay their fair share,” the bank found that relative to other economies, the US “prioritizes raising tax revenue from personal income and property.” In other words, the current American tax system raises more from people’s paychecks and real-estate investments than from companies, compared to the rest of the world.

JPMorgan’s economic research note on Thursday found that prior to President Donald Trump’s 2017 tax cuts, the US statutory corporate tax rate of 35% was high compared to other countries, but that law slashed them by 13.2% – the largest decline ever.

Furthermore, the bank found that dating back to 2000, revenues actually collected from American corporate taxes only represented about 2% of gross domestic product (GDP), versus a 3% average globally. This reflects, the bank said, “a complex system of exemptions and deductions embedded in the US tax code that reduces the corporate tax base and results in corporate taxes contributing a much lower share of total tax revenue in the US than elsewhere.”

And after the Trump tax cut, this percentage fell to just 1% of GDP. This explains the American reliance on taxing personal income and housing, the note said.

“The US stands out as having both the highest share of revenue from personal income (both labor and investment) across the economies we examine, and the smallest share of tax revenue from taxes on goods and services,” the note said.

While Biden and Democrats have supported raising the corporate tax rate to fund infrastructure, Republican lawmakers oppose doing so. For example, Sen. Roger Wicker of Mississippi, the ranking Republican on the Senate Commerce Committee, said that rolling back Trump’s 2017 tax cuts would be “an almost impossible sell” to get bipartisan support.

And Insider reported on Thursday that a group of Republican senators are drafting their own infrastructure plan – one that would cost between $600 billion and $800 billion, and would be funded without any corporate tax hikes.

“My own view is that the pay-for ought to come from people who are using it. So if its an airport, the people who are flying,” Sen. Mitt Romney of Utah, who is helping draft the plan, told reporters. “If it’s a port, the people who are shipping into the port; if it’s a rail system, the people who are using the rails; If it’s highways, it ought to be gas if it’s a gasoline powered vehicle.”

But Biden has remained firm on increasing the corporate tax rate to 28%, saying in a speech last week that the tax hike would level the playing field for large companies and average Americans.

He said: “I’m not trying to punish anybody, but damn it, maybe it’s because I come from a middle-class neighborhood, I’m sick and tired of ordinary people being fleeced.”

JPMorgan doesn’t put it in quite those terms, but its note concludes that so-called ordinary people account for a greater share of tax revenue in the US than elsewhere.

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Top GOP senator says it’s ‘an impossible sell’ for Republicans to strike a deal on an infrastructure package that rolls back Trump tax cuts

Sen. Roger Wicker
Sen. Roger Wicker

  • Sen. Roger Wicker downplayed the odds of an infrastructure deal that included rolling back Trump’s tax cuts.
  • He called it ‘an impossible sell’ among Republicans on Monday.
  • Wicker met with Biden to discuss his jobs plan along with other Republicans and Democrats.
  • See more stories on Insider’s business page.

Sen. Roger Wicker of Kansas, the ranking Republican on the Senate Commerce Committee, downplayed the prospect of a bipartisan deal on President Joe Biden’s infrastructure plan that included rolling back the 2017 Trump tax cuts.

“It would be an almost impossible sell from the president to come to a bipartisan agreement that included the undoing of that signature [law],” Wicker said. “And I did tell him that.”

He described the 2017 tax cuts as “one of my signature achievements in my entire career” and said he supports keeping the corporate tax rate at 21%. The law slashed it to that level from 35%, and Biden wants to lift it to 28% to generate federal dollars for his infrastructure plan.

The remarks came after a bipartisan meeting between the White House and a centrist group of eight lawmakers, which Wicker called “a good meeting.” Biden administration officials said it was part of an effort to shore up support for their infrastructure plan.

“He looks forward to hearing their ideas, and his objective is to find a way forward where we can modernize our nation’s infrastructure so we can compete with China,” Psaki said hours before the meeting. The White House also released an ‘infrastructure report card‘ on Monday that hit a majority of states with Cs and Ds.

The Biden infrastructure plan includes major funding to repair roads and bridges and set up clean energy incentives. It also contains federal dollars for in-home elder care, public transit, broadband, and schools, among others.

Republicans are lining up in opposition to the Biden infrastructure plan. They argue its tax hikes on multinational corporations would hurt job growth and their global competitiveness at a vulnerable period in the economic recovery.

Senate Majority Leader Mitch McConnell slammed the size and scope of the Democratic plan on Monday.

He said during a floor speech that Democrats were “embarking on an Orwellian campaign to convince everybody that any government policy whatsoever can be labeled ‘infrastructure.’ Liberals just have to believe in it hard enough.”

Still, some Democrats are seeking changes to the plan. Sen. Joe Manchin of West Virginia says he is opposed to a 28% corporate tax rate and favors 25% instead.

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Biden meets with bipartisan group on $2.3 trillion infrastructure plan, saying he’s open to negotiate

Joe Biden Oval Office
President Joe Biden.

  • Biden held his first official meeting with eight bipartisan lawmakers to discuss infrastructure.
  • He told reporters that he is willing to negotiate on both the size and the scope of his plan.
  • Republican lawmakers argue his plan is too focused on things aside from physical infrastructure.
  • See more stories on Insider’s business page.

For the first time since unveiling his $2.3 trillion infrastructure package two weeks ago, President Joe Biden met with a bipartisan group of lawmakers on Monday to discuss the proposal.

Eight lawmakers, including Chair of the Senate Committee on Climate, Science, and Transportation Maria Cantwell, ranking member of the House Committee on Transportation and Infrastructure Sam Graves, and Rep. Don Young of Alaska, joined Biden and Vice President Kamala Harris in the Oval Office to kick off bipartisan discussions.

“I’m prepared to negotiate as to the extent of my infrastructure package, as well as how we pay for it,” Biden told reporters after the meeting.

He also dismissed the idea that the meeting was just “window dressing,” and said he was “prepared to negotiate as to the extent of the infrastructure project as well as how we pay for it,” citing broadband and clean-water access as important parts of his definition of infrastructure.

This meeting followed a press briefing earlier in the day, when White House Press Secretary Jen Psaki said Biden is “absolutely” willing to negotiate on the size and scope of the package.

With regard to scope, Republican lawmakers have argued that it’s too focused on things besides rebuilding physical infrastructure, like roads and bridges. For example, Senate Minority Leader Mitch McConnell said in a statement two weeks ago that while Biden could have drafted a “serious, targeted infrastructure plan” that would have received bipartisan support, “the latest liberal wish-list the White House has decided to label ‘infrastructure’ is a major missed opportunity by this Administration.”

And with regards to the size of the plan, Republican lawmakers have said the $2.3 trillion price tag, along with Biden’s proposed tax hikes, are too high.

Ranking member of the Senate Committee on Commerce, Science and Transportation Roger Wicker, who attended the meeting, told ABC News in an interview on Sunday, “We are willing to negotiate with him [Biden] on an infrastructure package, and this trillion-dollar number is way too high for me.”

He added that negotiations on the plan have to look different than the $1.9 trillion stimulus plan that passed in February without any Republican votes.

Some Democrats have said they’d like to see some changes to the package. Moderate Democratic Sen. Joe Manchin of West Virginia said on a West Virginia radio talk show last week that he does not support Biden’s proposed corporate tax increase to 28%. “Well, the bill basically is not going to end up that way,” he said.

Psaki emphasized in the Monday press briefing that Biden genuinely wants to work with both parties to create a bipartisan infrastructure bill.

“You don’t use the president of the United States’ time, multiple times over … if you did not want to authentically hear from the members attending about their ideas about how to move forward this package,” she said.

Also in the meeting were Democratic Rep. Donald M. Payne, Jr. of New Jersey, Republican Sen. Deb Fischer of Nebraska, Democratic Sen. Alex Padilla of California, and Democratic Rep. David Price of North Carolina, who all sit on committees relevant to rebuilding infrastructure.

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Republicans are touting benefits of $1.9 trillion COVID-19 relief bill despite voting against it

Madison Cawthorn
Rep. Madison Cawthorn (R-North Carolina) speaks on the House floor.

  • Republicans are touting benefits of the COVID-19 relief legislation they opposed in Congress.
  • Mitch McConnell said Republicans would have a “talk” with Americans about the bill’s issues.
  • Meanwhile, funding for healthcare and restaurants is being praised by some GOP members.
  • See more stories on Insider’s business page.

For months, Congressional Republicans have been unanimously opposed to the American Rescue Plan Act of 2021, the $1.9 trillion COVID-19 relief package that was backed by President Joe Biden and signed into law in March.

The stimulus package, which included $1,400 direct stimulus payments for individuals, funding for state and local governments, $300 in federal unemployment aid through September, and an expansion of the child tax credit, among other measures, did not receive a single GOP vote of support in the House or Senate.

After the bill’s passage, GOP Senate Minority Leader Mitch McConnell of Kentucky slammed the legislation as “a classic example of big-government Democratic overreach in the name of Covid relief” and “one of the worst pieces of legislation” he’s seen in his 36 years in the Senate.

He also said the GOP would “talk repeatedly” to the American public about the true contents of the bill in the coming months.

However, some Republicans are now touting popular elements of the bill they railed against on Capitol Hill.

Conservative freshman GOP Rep. Madison Cawthorn of North Carolina pointed to health funding in his district in a tweet last week, including nearly $2.5 million for the Appalachian Mountain Community Health Centers and $4.6 million for Western North Carolina Community Health Services that was part of the legislation.

“Happy to announce that NC-11 was awarded grants from the U.S. Department of Health & Human Services,” he wrote. “Proud to see tax-payer dollars returned to NC-11.”

Democratic National Committee Chairman Jaime Harrison took note of Hawthorn’s tweet and blasted the congressman and the GOP.

“Come’on man,” he wrote. “@RepCawthorn is trying to take credit for the grants HE VOTED AGAINST. Republicans have no shame.”

Read more: Here are 9 hurdles Biden’s infrastructure plan would have to overcome in Congress before it can become law

Cawthorn spokesman Micah Bock told NBC News in a statement last week that the congressman uses his social media account “to post information relevant to his constituents in NC-11.”

“Oftentimes this means providing relevant federal information on proposals that the congressman does not support,” he said. “There are portions of the American Rescue Plan that benefit NC-11, however, bills are not passed in portions, they are passed entirely or not at all, and this bill does significantly more harm than good.”

GOP Sen. Roger Wicker of Mississippi praised the billions in targeted funding for the restaurant industry that he championed – it was part the final package that he voted against.

“Independent restaurant operators have won $28.6 billion worth of targeted relief,” he tweeted after the bill passed. “This funding will ensure small businesses can survive the pandemic by helping to adapt their operations and keep their employees on the payroll.”

When asked by CNN’s Manu Raju why he didn’t support the full measure, Wicker said he didn’t have to accept the full measure and was critical of the questioning.

“Just because there’s one good provision in a $1.9 trillion bill, doesn’t mean I have to vote for it … I think it’s a stupid question. I’m not going to vote for $1.9 trillion just because it has a couple of good provisions in it.”

Congressional Republicans have currently found themselves boxed into a corner on the issue.

A Pew Research poll released shortly before the bill’s signing showed 70% of US adults backing the legislation, with only 28% of respondents opposed to the measure.

Even 41% of Republican or Republican-leaning respondents, a significant minority, backed the COVID-19 relief bill.

National GOP leaders have pledged to use the bill as a campaign attack against Democrats in the 2022 midterm elections, but nearly three dozen Republican mayors across the county, from David Holt of Oklahoma City to John Giles of Mesa, backed the legislation.

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