At separate events on Tuesday, Treasury Secretary Janet Yellen and Senate Finance Committee Chairman Ron Wyden (D-Ore.) called for tax increases on corporations to help pay for a burgeoning infrastructure bill that is expected to be introduced later this year. But is not currently clear if tax increases can muster enough support to pass Congress.
Yellen, in her speech to the U.S. Chamber of Commerce – an organization historically known to back tax cuts and not tax increases – said it was time for corporations to pay their fair share.
“Alongside the Jobs Plan, we are proposing to fundamentally reform the corporate tax system. That will help offset the cost of the proposed public investments. With corporate taxes at a historical low of one percent of GDP, we believe the corporate sector can contribute to this effort by bearing its fair share,” she said.
Yellen was referring to President Joe Biden’s American Jobs Plan that includes several proposals affecting infrastructure. It also seeks to increase the corporate income tax rate from 21% to 28% and make several changes to international provisions that would equate to tax increases.
Wyden, in opening remarks during a Finance Committee hearing about financing options to pay for an infrastructure bill, called for similar tax increases.
“It’s long past time for mega-corporations to pay a fair share for building and repairing roads and bridges. They drive trucks across America’s roads and highways. They send products to market through the airports and waterways. They rely on our power grids and communication systems. They ought to pitch in for the infrastructure that makes America an economic superpower,” he said.
Wyden in April proposed to increase international tax provisions in a “framework” he introduced with Senators Mark Warner (D-Va.) and Sherrod Brown (D-Ohio). The trio has yet to introduce legislation on this topic.
While high-ranking Democratic officials spoke with one voice on increasing taxes, it is not clear if the rest of their caucus feels the same way. Recent reporting shows that some congressional Democrats are hesitant to raise levies, which could make it hard to pass fully-paid-for Biden’s plans through Congress.
While most liberal lawmakers are willing to support increasing taxes on corporations, there are some who are cautious to do so. The reason is that moderate Democrats in the House face tough re-election bids in 2022 and supporting tax increases of any kind could hurt their odds for maintaining their seats.
The margin of error to pass a bill in the House is also incredibly narrow. It would only take four House Democrats to oppose legislation that increases taxes for that measure to fail. Congressional Republicans have long opposed tax increases and are unlikely to change their minds now.