The infrastructure spending would help Amazon. Also note that government spending on roads, rails, and other infrastructure in the United States will theoretically help Amazon more than any other business.
“(Taxes) are going to have to go up; you can’t run a 10-15% deficit forever,” he said. “If people thought their taxes were used to help the poor and disadvantaged, they would much rather pay more.”
Feed him more. Continuing prosperity, he seems to be saying, requires that the government’s money gusher is not extinguished and that Biden can succeed in ousting trillions of Democrats in Congress to pay for emergency stimulus spending to eliminate trillions of Democrats in Congress to update the country. infrastructure for a new post-fossil economy.
I say he will have to take the money out of the Democrats since Republicans were united against the Covid relief bill and all signs are that they will now unite against the infrastructure proposal by labeling it as a higher taxes.
Tax increases after tax cuts? The GOP’s great accomplishment of the Trump years was a massive and permanent reduction in corporate taxes. The tax cut, however, was not offset by spending cuts, and even before the pandemic hit, the government was on track to massive and growing budget deficits.
The pandemic has struck, however, and the deficits have grown far larger than huge.
Now Biden wants to spend even more and leave a New Deal-sized mark on the country.
Spending on infrastructure, in theory, has a bipartisan appeal, as both Red States and Blue States will benefit, even if Republicans are loath to give Biden a victory.
Tax hikes, unless they are aimed at someone else, rarely have any appeal.
Biden’s pitch. Treasury Secretary Janet Yellen presented the balance sheet, blaming the GOP’s tax plan for red ink as she presented the president’s plan to raise the corporate tax rate.
Noting that corporate tax collections have fallen to their lowest level since World War II, Yellen said on Wednesday that the Republicans’ tax cuts and jobs law of 2017 failed to attract new productions or investments in the United States. Instead, he made companies send workers and profits overseas.
And: Republicans’ tax cuts in 2017, which cut the corporate tax rate from 35% to 21%, meant that the share of tax revenue collected as a share of the economy fell to 1%, the White House said. Historically, corporate taxes have increased by around 2% of GDP.
And: The report highlights the fact that the share of federal revenues generated by corporate taxes has fallen steadily since 1950 and is now below 10%. Meanwhile, the share of federal revenue collected by individuals now exceeds 80%.
What would Biden’s plan do? This is straight from Luhby and Lobosco:
Increase in corporate tax: Biden would increase the corporate tax rate to 28%, from 21%. The rate hit 35% before former President Donald Trump and Republicans in Congress cut taxes in 2017.
Tax on accounting income: The president would levy a minimum tax of 15% on income that the largest corporations report to investors, called accounting income, as opposed to income reported to the Internal Revenue Service.
Company reversals: Biden would make it harder for US companies to acquire or merge with a foreign company to avoid paying US taxes by pretending to be a foreign company. And he wants to encourage other countries to adopt strong minimum corporate taxes, including denying certain deductions to foreign companies based in countries without such a tax.
Clean energy incentives: The plan aims to advance clean electricity generation by providing for a 10-year extension of tax credits for clean energy production and storage, and by making these credits pay off directly. It would also create and expand other incentives. The administration would remove subsidies to the oil and gas industry.
Enforcement: The president also wants to provide more funding to the IRS to better prosecute companies that do not meet their tax obligations.
This is all an opening offer. The Chamber of Commerce sounded the alarm on the tax hike.
What is really possible? West Virginia Democratic Senator Joe Manchin, Senate Goldilocks, has said he will not approve a corporate tax rate higher than 25%. So it’s the top Democrats who can leave unless they find a Republican to vote with them and smash a GOP filibuster. (Ahem. That’s an unlikely scenario.)
The bottom line. The individual pain felt by still unemployed Americans and the hardships faced in industries like entertainment and restaurants are still very real, but the government’s commitment to spend trillions to float the U.S. economy during the pandemic seems to have worked from a macro point of view. But there is a dynamic, at least among Democrats, to use this moment to do something big on everything from bridges to broadband. How to pay it will be the trickiest part.