Business rages on Biden, Democrats over tax hikes

Big US business groups are blasting a $740 billion legislative package on Capitol Hill that will raise corporate taxes to fund the government’s climate and health care initiatives.

The US Chamber of Commerce has said the so-called Cut Inflation Act, which is about to be signed into law by President Biden, would impose “significant new tax increases and controls on businesses.” unprecedented government awards”.

The bill, which passed the Democratic-led Senate over the weekend, includes a minimum tax of 15% on corporations that generate more than $1 billion in profits annually based on figures shown in the financial statements.

The bill also includes $80 billion for the Internal Revenue Service, which is expected to hire 87,000 additional officers.

The Joint Committee on Taxation, a nonpartisan watchdog, estimates that between 78% and 90% of the additional $200 billion the agency will collect from its increased staff will be collected from small businesses that earn less. of $200,000 per year. .

Senate Majority Leader Chuck Schumer announced the outlines of the legislation last week.

The National Association of Manufacturers told the Financial Times that the tax increases would be “a severe blow to our industry’s ability to raise wages, hire workers and invest in our communities”.

Another pro-business lobby group, The Business Roundtable, said the legislation would add $300 billion in new costs for employers at an inopportune time when the country faces economic headwinds.

The legislation also imposes a 1% tax on stock buybacks — the result of a compromise deal between Democratic leaders and Sen. Kyrsten Sinema (D-Arizona), who overturned an earlier proposal to close the loophole. interest rate favored by hedge funds.

The Chamber of Commerce has criticized the 1% tax on share buybacks, which comes into effect next year, saying it would “distort the efficient movement of capital…and diminish the value of retirement savings of Americans”.

The pharmaceutical industry also strongly opposes the provision of the bill that would allow the government to negotiate the price of certain medications for seniors.

Senator Joe Manchin (D-WV)
Sen. Joe Manchin (D-WV) negotiated with Schumer in secret for months after “Build Back Better” collapsed.
Getty Images

“Today’s vote may seem like a political victory for Democrats, but it is truly a tragic loss for patients,” said Stephen Ubl, president of Pharmaceutical Research and Manufacturers of America.

The Inflation Cut Act will be voted on in the House of Representatives, where it is expected to pass this week thanks to a Democratic-led majority. Biden is expected to sign him soon after.

Tax experts told the Post that the stock buyback tax, which could raise between $70 billion and $124 billion, could become a “gateway drug” to impose levies on all kinds of financial transactions.

Companies breathed a collective sigh of relief when Sinema forced his party leadership to agree to a watered down version of the legislation.

Initially, the bill contained a provision that raised the statutory corporate tax rate from 21% to 28% — part of Biden’s plan to reverse Trump-era tax cuts. But Sinema’s veto rejected that idea.

“If the 2017 tax reforms were a 10 and building back better [Biden’s original plan] was a zero, where is it? I guess I’d say it’s a five,’ Neil Bradley, the House’s director of policy, told FT.

“He didn’t cut taxes; it raised taxes, but it’s much better than Build Back Better.

The president, for his part, insisted he was not anti-business.

“I am a capitalist. I’m not trying to punish anyone,” Biden said Friday. “But I say everyone – everyone should pay their fair share. Just their fair share.

New York Post

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