Vermont congressional delegation divided over tax hike
President Joe Biden wants a corporate tax rate hike to pay for a $ 2 trillion infrastructure overhaul, and Congress is expected to debate the proposal this week.
The corporate tax rate was reduced in 2017 – under the administration of President Donald Trump – from 35% to 21% to stimulate private sector growth and development. Some members of Congress want the rate to be restored to pre-Trump levels in order to hold companies financially responsible. Others say 28% is too high.
The Vermont congressional delegation is divided on the issue with the state’s two moderate Democrats, Rep. Peter Welch and Senator Patrick Leahy, supporting the president’s more modest rate bracket, and Senator Bernie Sanders, a progressive independent , insisting on a reset of the 35% rate.
Sanders introduced legislation at the end of March, this would reduce the corporate tax rate to 35%. The legislation also includes a progressive estate tax – a 45% tax rate on estates valued between $ 3.5 million and $ 10 million, with estates valued at over $ 1 billion being taxed up to 65%.
The senator’s office ignored VTDigger’s questions about whether the senator would compromise on a 28% tax rate or even 25%. Instead, Sanders staff sent out a statement that the senator supported a tax code that does not allow billionaires and businesses to pay taxes at a lower rate than workers.
Sanders told CNN last month, that the infrastructure plan is a “serious proposition” but that “human infrastructure” for the working class must also be a priority for the administration. It’s unclear whether Sanders would support an infrastructure plan funded by a lower corporate tax rate.
Leahy, who chairs the powerful Senate Appropriations Committee, supports setting the corporate tax rate at 28%, according to David Carle, a spokesperson for Leahy. Leahy probably wouldn’t say if he would agree to a compromise on a lower rate, as negotiations are still ongoing, Carle said.
“Raising the corporate tax rate to 28 percent is a reasonable proposal that would help fund the reconstruction of the country’s deteriorating infrastructure,” Carle told VTDigger in an email. “As the new chairman of the Senate Judiciary Subcommittee on Intellectual Property, he remains particularly focused on promoting onshore investment – and discouraging offshore investment – as proposed in President Biden’s Made in America tax plan.
“Businesses need to pay their fair share of taxes, and it will continue to work there as a priority,” Carle said.
Leahy told VTDigger that the plan was “long overdue” and that it would revamp the nation’s electricity grid and bring much needed broadband to rural Vermont. Welch said Biden’s plan is “finally a recognition” that infrastructure problems disproportionately affect rural and disadvantaged areas.
At a press conference last week, Welch said he supported increasing the corporate tax rate, but didn’t want to say what percentage he was comfortable with. The corporate tax rate is unlikely to return to 35%, he said.
“I don’t have a number on that,” Welch said. “He won’t go at 35.”
The corporate tax system must be reformed, he said, because many large companies benefit from loopholes that allow them to pay little or nothing in federal income tax.
“Rate 35 is a nominal rate. So there were so many deductions and exemptions and maneuvering around it, that was just a name, ”Welch said. “It’s not just the rate. These are all exclusions, the possibility of outsourcing, the possibility of setting up a company in the Cayman Islands. All of these things are really relevant. ”
Last year, 55 major companies – including Nike, FedEx and Dish Network – paid nothing in federal income taxes, according to The Institute on Taxation and Economic Policy, a non-profit tax policy organization.
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