Sign up now for FREE unlimited access to Reuters.com Register WASHINGTON, July 28 (Reuters) – U.S. President Joe Biden’s campaign pledge to raise taxes on corporations and the wealthy as part of a battle against stark income inequality in the United States received an unexpected boost on Wednesday. Early proposals to raise tax rates by Biden and his fellow Democrats hit a brick wall in Congress after Republicans and some Democrats opposed them. But a surprise reversal by West Virginia Democratic Sen. Joe Manchin, a surprise vote in the divided Senate, breathed new life into Biden’s tax agenda. The amount that American corporations contribute to the tax revenue that funds roads and schools has plummeted since the 1940s. Sign up now for FREE unlimited access to Reuters.com Register Biden has often said in office that companies should pay a “fair share,” in contrast to the deference to private markets that Republicans began with the election of Ronald Reagan in 1980 and bolstered by rounds of tax cuts and deregulation and by the two parts. The new compromise bill includes $430 billion in new energy spending, electric vehicle tax credits and health insurance investments. She is paying more than herself by raising minimum taxes on big corporations and enforcing existing tax laws, Manchin and Senate Majority Leader Chuck Schumer said in a statement. The bill would impose a 15 percent minimum tax on companies with more than $1 billion in profits, raising $313 billion over a decade, they wrote. Companies could claim net operating losses and tax credits against the 15%. The U.S. corporate tax rate dropped to 21% from 35% after the 2017 tax cut pushed by then-President Donald Trump and his Republican colleagues, but many companies pay far less than that, and some of the largest pay no federal taxes . including the Institute of Taxation and Economic Policy have found. Biden proposed raising that rate to 28 percent last year as part of an infrastructure spending bill, but the tax component was stripped from the bill. The new Manchin-Sumer bill also aims to close the so-called vested interest loophole, a goal of Democrats. Carried interest refers to a longstanding Wall Street tax break that allowed many private equity and hedge fund investors to pay the lower capital gains tax rate on much of their income, rather than the higher income tax rate paid by employees. Closing the gap would raise $14 billion, senators say. Schumer said he expects the Senate to vote on legislation next week to “lower prescription drug prices, address the climate crisis with urgency and force, ensure that the wealthiest corporations and individuals pay their fair share of taxes and to reduce the deficit”. The Manchin-Schumer measure is significantly smaller than the multi-trillion dollar spending bill that Democrats envisioned last year. But it’s still significant progress for Biden’s policy agenda ahead of the Nov. 8 midterm elections, which could determine whether Democrats retain control of Congress. It came just as Biden celebrated the Senate’s passage of a bill aimed at boosting the US semiconductor industry, another key priority of his administration, and as he struggles with low job approval ratings and declining support from his own party following a series of conservative Supreme Court decisions. “This bill will reduce the deficit beyond the record $1.7 trillion in deficit reduction we’ve already achieved this year, which will also help fight inflation,” Biden said in a statement. “And we’re going to pay for all of that by requiring big corporations to pay their fair share of taxes, with no tax increases at all for families making under $400,000 a year,” he said. Sign up now for FREE unlimited access to Reuters.com Register Report by Steve Holland? Editor: Heather Timmons Our Standards: The Thomson Reuters Trust Principles.
