The Joe Biden administration wants a tax increase for companies to fund its priorities, including an infrastructure plan, US Treasury Secretary Janet Yellen said at a hearing before the House of Representatives on Tuesday.
Biden “was clear about his tax proposals,” Yellen told the House of Commons Financial Services Commission. The government wants to increase corporate tax from the current 21% to 28%, he said.
Biden is expected to shortly present his proposal for a large-scale infrastructure plan aimed at creating jobs and fighting climate change, helping the U.S. economy weather the COVID-19 crisis.
But after approving a massive $ 1.9 trillion emergency plan for homes and businesses, the president is under pressure from Congress to keep spending in check.
“I think a package that includes investment in people and investment in infrastructure will help create good jobs for the US economy and changes in tax structure will help pay for those programs,” said Yellen.
Several US media outlets reported that Biden is considering spending a total of $ 3 trillion on infrastructure, which will be split into different bills.
White House spokeswoman Jen Psaki said in a tweet Monday night that with a new plan, the government will “focus on jobs and how to improve the lives of Americans.”
Republicans, as well as more conservative parts of the Democratic Party, are against additional loans after the government has already spent more than trillions of dollars helping businesses and households.
Yellen argued at the hearing that the corporate tax burden is “very low”.
In fact, according to Politico – who cites a government study – the average tax rate for US companies is much lower than 21% and nearly 7.8% after the major tax reform the Republicans passed in 2017.
The Biden government said it wants to reverse this reform, which at the time of approval drew harsh criticism from Democrats for favoring multinational corporations and higher-income households. So experts were already warning that companies weren’t paying the real tax rate.
The United States is also facing the degradation of its infrastructure as most of the highways, bridges, railways and airports were built between the 1950s and 1970s.
– “Lobbying” – “Three trillion dollars is a lot of money, especially if it came after stimulus packages worth nearly six trillion dollars,” said Gregory Daco, an economist at Oxford Economics.
“But the fundamental difference is that emergency measures, including controls on households, have a specific effect, while infrastructure investment aims to promote long-term growth,” he explains.
The companies began “lobbying” and a coalition of 140 groups led by the US Chamber of Commerce and Bipartisan Policy Center urged lawmakers to vote on a bill by July 4, Independence Day. But they don’t want to hear about tax increases.
This Tuesday, Yellen, along with Federal Reserve Chairman Jerome Powell, appeared before Congress. Former Republican President Donald Trump chose Powell to replace Yellen, who previously ran the US broadcaster.
Powell stressed the need to support the economy as he affirmed that the United States is “a long way” from recovering from the pandemic recession and again averted the risk of a protracted inflationary outbreak.
“We do not expect inflation to increase in the course of this year,” said the Fed chairman.