U.S. President Joe Biden’s promise to increase taxes on corporations and wealthy individuals as part of a battle against glaring income inequality in the United States garnered an unanticipated boost on Wednesday from West Virginia Democratic Senator Joe Manchin.
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Early proposals to increase tax rates from Biden and fellow Democrats halted in Congress after Republicans, and some Democrats, opposed them. But a sudden reversal by Senator Joe Manchin, a swing vote in the divided Senate, has given Biden’s tax agenda a new opportunity to gain traction.
The new compromise bill includes $430 billion in government spending on energy, electric vehicle tax credits and health insurance investments. The bill would also impose a 15% minimum tax on corporations with profits over $1 billion, raising $313 billion over a decade, Manchin and Senate Majority Leader Chuck Schumer said in a statement. Companies could claim net operating losses and tax credits against the 15%.
The U.S. corporate tax rate has plunged over the last 40 years, with the most recent drop to 21% from 35% after a 2017 tax cut pushed by then-President Donald Trump. But according to many research groups, including the Institute on Taxation and Economic Policy, have found many companies pay much less than that, and some of the largest pay no federal taxes at all.
Biden proposed raising that rate to 28% in 2021, as part of a larger infrastructure spending bill, but the tax component was struck from the bill.
Schumer said he expected the Senate to vote on the legislation next week, to “lower prescription drug prices, tackle the climate crisis with urgency and vigor, ensure the wealthiest corporations and individuals pay their fair share in taxes, and reduce the deficit.”
The multi-trillion dollar spending bill the Democrats proposed last year may have been substantially larger than the new Manchin-Schumer deal, but this measure does represent a major advance for Biden’s policy agenda ahead of midterm elections on Nov. 8.
“This bill will reduce the deficit beyond the record setting $1.7 trillion in deficit reduction we have already achieved this year, which will help fight inflation as well,” Biden said in a statement.
“And we will pay for all of this by requiring big corporations to pay their fair share of taxes, with no tax increases at all for families making under $400,000 a year,” he added.
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