By David Morgan and David Shepardson
WASHINGTON (Reuters) -U.S. President Joe Biden’s plan to pay for his $2 trillion infrastructure plan with higher corporate taxes faces hurdles in Congress from Republicans who say it will kill jobs and some of his fellow Democrats who want a bigger write-off for state and local taxes.
The plan, which Biden will unveil at an event in Pittsburgh later on Wednesday, would hike the U.S. corporate tax rate to 28%, from its current 21%, to secure more revenue from corporations that have used offshore tax shelters and other measures to reduce their tax burdens.
“President Biden’s reform will reverse this damage and fundamentally reform the way the tax code treats the largest corporations,” the White House said earlier as it released details of the plan.
The Biden tax provisions quickly came under fire from American business interests and Republicans on a key tax committee in the U.S. House of Representatives.
“The proposal is dangerously misguided when it comes to how to pay for infrastructure,” the U.S. Chamber of Commerce said in a statement that warned the tax hikes would “slow the economic recovery and make the U.S. less competitive globally.”
Unveiled along with Biden’s infrastructure plan, the tax provisions would roll back many of former President Donald Trump’s 2017 tax cuts for businesses and the wealthy.
Biden’s overall infrastructure plan charts a dramatic shift in the direction of the U.S. economy, with investments in traditional projects like roads and bridges along with climate change and human services like elder care.
The president hopes to draw bipartisan support from Republicans in Congress but will need solid backing from Democrats in the Senate and the House, if Republicans uniformly reject the legislation as they did his $1.9 trillion COVID-19 relief package.
But some moderate Democrats hope to reverse Trump’s cap on the federal deduction for state and local taxes, or SALT, which is felt most acutely in Northeastern states with higher taxes.
“We say, no SALT, no deal,” three House Democrats from New York and New Jersey said this week.
Democrats control the House by a margin of 219 to 211, so they will need to stay united if no Republicans support the plan. The party has not yet decided how to shepherd the package through Congress, a House Democratic aide said.
Republicans on the tax-writing House Ways and Means Committee decried the initiative in a pre-dawn statement as “a series of job-killing tax hikes” that would saddle American companies with a higher tax rate that their competitors in “Communist China.”
(Reporting by David Morgan and David ShepardsonEditing by Andy Sullivan and Paul Simao)
