USA: administration confirms wanting to increase corporate taxes

Joe Biden “has been clear on the tax proposals,” said Janet Yellen, adding that the president intended to reduce the corporate tax rate to 28% from the current 21%.

–

The Biden administration intends to increase taxes on businesses to help finance a gigantic investment plan, particularly in infrastructure, the US Treasury Secretary confirmed on Tuesday during a hearing before the House of Representatives.

Joe Biden “has been clear on the tax proposals,” said Janet Yellen, adding that the president intended to raise the corporate tax rate to 28% from the current 21%.

“We are witnessing a global race to pull down corporate taxation and we hope to end it,” she added.

In addition, the tax hike could be “combined with lower incentives for US companies that allow them to move their support functions offshore,” said the Secretary of the Treasury.

During the presidential campaign, Joe Biden proposed to raise the corporate tax rate from 21% to 28% and increase the taxes of individuals earning more than $ 400,000 a year.

These projects have come back to the fore in recent days as the Democratic administration works on a bill to launch massive investments of $ 3 trillion.

Republicans, but also a fringe of Democrats, are fiercely opposed to additional debt when the government has already spent since the start of the pandemic nearly $ 6 trillion in favor of households and businesses.

The financing of a new scale plan could therefore be done via taxes.

Janet Yellen argued that corporate tax is currently “very low”.

According to Politico, which cites a government study, the average real US corporate tax rate is already well below the theoretical 21%: it had fallen by more than half, to 7.8%, following the major tax overhaul. adopted by Republicans in 2017.

Joe Biden’s government intends to revisit this flagship measure of the Trump era.

This reform had aroused much criticism from the democratic opposition of the time and economists because it gave pride of place to reducing taxes for multinationals and wealthy households. Experts also pointed out at the time that companies were already not paying the actual tax rate.

Key jobs

“I think a package of investments in people, investments in infrastructure, will help create good jobs in the US economy, and changes in the tax structure will help fund these programs,” he said. also stated Janet Yellen.

In addition to job creation, it is becoming vital in the United States to modernize a myriad of dilapidated infrastructure.

Most highways, roads, bridges, railways, airports, etc. were built between the 1950s and 1970s. And, they have been poorly maintained over time.

The goal of the Biden administration is both to modernize existing infrastructure and to launch more environmentally friendly projects in the water, transport and energy sectors.

For their part, economists stress that these structuring projects would create growth over time and not ad hoc, as is the case with the $ 1.9 trillion rescue plan recently enacted.

Business lobby

Even before the $ 3 trillion plan was presented, backstage negotiations in Congress began, with companies pressuring lawmakers to avoid backtracking their taxes.

On Tuesday, the Treasury Secretary was auditioned alongside Central Bank President Jerome Powell. This is the first time that they have been heard simultaneously in their current roles.

President Donald Trump had chosen to replace Ms. Yellen with Mr. Powell at the head of the Federal Reserve (Fed). But the two officials have spent several years working together at the Fed and have a cordial relationship.

They both said Tuesday of a stronger-than-expected economic recovery while stressing the need to stay the course to help “millions of Americans who still suffer.”

Jerome Powell insisted on the need to continue to support the economy which is “far from fully recovered” from the recession caused by the pandemic.

And he once again downplayed the risks of uncontrolled inflation, insisting that the Federal Reserve had the tools to deal with it.

–