RILA has long advocated for a competitive corporate tax rate, where all profitable companies contribute to the needs of the nation, and we quickly pointed out to key Congressional Democrats, if they are serious about tax fairness, a rate increase on industries already paying their fair share fails to meet that standard.
A key moderate voice in the Senate, Sen. Kyrsten Sinema of Arizona, agreed. When Senate Democrats and the President introduced their tax framework, the corporate rate remained at 21 percent and they rightly included a minimum tax for all large, profitable companies that paid little or no taxes. It seemed that with Sen. Sinema’s support the framework looked likely to pass by the end of last year.
But Senator Joe Manchin of West Virginia had other plans. Senator Manchin expressed reservations about the proposal and after conversations went south with the White House – declared Build Back Better dead in late December. For months since then, he has continued to express his concerns with the package – rising inflation, workforce participation, fiscal irresponsibility, and from time to time, not rolling back enough of the 2017 Tax Cuts and Jobs Act – sometimes referring to a 25 percent corporate tax rate.
It was in this environment President Biden gave his first State of the Union address, eager to reboot his domestic agenda. And while he is no longer Building Back Better, he is still eager to “build a better America” built on much of the same policies as before but with more emphasis on inflation and fiscal responsibility. And like before – the rhetoric was centered on making sure “corporations and wealthy Americans pay their fair share.” The difference is this time, the policy reflected it.
Gone was any mention of the corporate rate, and instead it was replaced with a pitch for the minimum tax, saying: “last year, 55 of the Fortune 500 companies earned $40 billion in profit and paid zero in federal taxes. Look, it’s not fair. That’s why I proposed a 15 percent minimum tax rate for corporations.”
Last year, 55 of the Fortune 500 companies earned $40 billion in profit and paid zero in federal taxes. Look, it’s not fair. That’s why I proposed a 15 percent minimum tax rate for corporations.
While there is still a long way to go between now and any final bill, it does look like President Biden was able to resurrect negotiations over his spending package through the State of the Union, and along with it a tax fairness agenda – hopefully leaving a corporate rate increase in its dust. Stay tuned to RILA, we will let you know.
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