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Biden to Pay for Infrastructure Plan With 15 Years of Corporate Taxes

The president will propose using the revenue from increasing corporate taxes to pay for eight years of ambitious spending on roads, bridges, utilities and other needs.

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WASHINGTON — President Biden intends to pay for the $2 trillion package of infrastructure spending he will propose on Wednesday with a substantial increase in corporate taxes, people briefed on the plan said Tuesday.

The scale of the infrastructure program — one of the most ambitious attempts in generations to shore up the nation’s aging roads, bridges, rail lines and utilities — is so big that it will require 15 years of higher taxes on corporations to pay for eight years of spending, they said.

Despite his ambitious programs, Mr. Biden had pledged that his long-term economic agenda would not add further to the growing national debt. But the fact that his proposed tax increases would not cover his spending over the same period shows the challenge he has in balancing his big goals and the deficit.

Mr. Biden’s proposals include raising the corporate tax rate to 28 percent from 21 percent and efforts to force multinational corporations to pay significantly more in tax to the United States on profits they earn and book overseas. The corporate tax rate had been cut under President Donald J. Trump from 35 percent to 21 percent.

The new plans come on top of the $1.9 trillion stimulus plan Mr. Biden signed into law this month, which was financed entirely by borrowing and was passed with no Republican support. The programs reflect Mr. Biden’s campaign promises and a leftward shift in his party in recent years.

If his full set of proposals became law, they would mark a new era of ambitious federal spending to address longstanding social and economic problems. Their odds of passing Congress have risen in the midst of a pandemic in which lawmakers have approved record amounts of government spending to rescue the economy from recession.

Mr. Biden will lay out his infrastructure plan in an afternoon speech in Pittsburgh. It is the first step in a two-part agenda to overhaul American capitalism, fight climate change and attempt to improve the productivity of the economy.

Together, those two proposals could cost as much as $4 trillion between spending increases and tax incentives. The second phase of the proposals is expected to include tax increases on high-earning individuals.

The spending in the first phase of Mr. Biden’s plan includes a wide range of investments in physical infrastructure, including highways, mass transit and electric vehicle charging systems and upgrades to water pipes, the electric grid and veterans’ hospitals. It also includes a big increase in federal research and development spending and efforts to provide home-based care to older and disabled Americans.

The second step, which officials have suggested will come next month, will feature spending and tax credits meant to invest in what liberal economists call human infrastructure. It will include aid to the poor, paid leave for workers and measures meant to reduce the cost of child care and help women work and earn more.

Proposals to pay for that second step include tax increases on high-earning individuals and the wealthy, like an increase in the top marginal income tax rate to 39.6 percent from 37 percent.

Doug Mills/The New York Times

The details of those proposals largely remain in line with the infrastructure plans that administration officials presented to Mr. Biden last week.

Internal administration documents and people familiar with the plans suggest the first phase will include $625 billion for roads, bridges, transit, rail, ports and electric vehicle charging stations, along with $25 billion for federal government infrastructure including for veterans.

That phase will also includes hundreds of billions of dollars for utilities, water delivery systems, rural broadband, worker training, advanced manufacturing and research and development.

The first package will now include hundreds of billions of dollars to support home-based care for older and disabled Americans, a change from the plans that aides had drawn up earlier this month. That shift was reported by The Washington Post.

The unusual 15-year window for a tax increase to offset spending could help Democrats if they choose to attempt to push Mr. Biden’s plan via budget reconciliation, a parliamentary process that would allow them to bypass the 60-vote requirement imposed by the Senate filibuster and pass the plan with only Democratic votes.

That process starts with the passage of a budget resolution, which typically covers 10 years of taxes and spending. But Democrats could extend the resolution to cover 15 years, allowing increased revenue from Mr. Biden’s corporate tax increases to pay off spending programs that ended after eight years.

Senate Republicans considered extending the budget window when they used the reconciliation process to pass more than $1.5 trillion in tax cuts in 2017, but they ultimately decided to stick with a 10-year window.

Mr. Biden’s aides briefed top committee leaders and staff from both parties on the plan Tuesday afternoon, as rank-and-file lawmakers continued to pepper the administration with specific policy requests and ultimatums about what could be the one of the most expansive infrastructure investments in American history.

Doug Mills/The New York Times

The briefing, led by Brian C. Deese, one of Mr. Biden’s top economic advisers, and Louisa Terrell, the head of the Office of Legislative Affairs, gave both Democrats and Republicans a broad overview of the plan to invest in physical infrastructure, focusing on changes to the corporate tax rate as the main source of payment.

There was not as much discussion of the second phase of Mr. Biden’s plan, which includes policies aimed at addressing inequities and supporting American families, according to three people who disclosed details of the discussion on condition on anonymity.

Jen Psaki, the White House press secretary, told reporters on Tuesday that the plan Mr. Biden was set to detail on Wednesday was “about making an investment in America — not just modernizing our roads or railways or bridges, but building an infrastructure of the future. So some of it is certainly infrastructure, shovel-ready projects. Some of it is: How do we expand broadband access? Some of it is ensuring that we are addressing the needs in people’s homes and communities.”

Ms. Psaki also suggested that Mr. Biden is not locked in on his preferred tax plans to fund the measure.

“People may have different ideas about how to pay for it,” she said. “We’re open to hearing them. So hopefully people will bring forward ideas.”

A leading business lobbying group in Washington, the U.S. Chamber of Commerce, welcomed that apparent flexibility and the ambition of Mr. Biden’s plans for physical infrastructure — even as officials continued to warn that Mr. Biden’s corporate tax increases could scuttle the chance of bipartisan cooperation.

“Raising corporate taxes, and others, is kind of a nonstarter for Republicans. It’s kind of a nonstarter for us, too,” said Ed Mortimer, the chamber’s vice president of transportation and infrastructure. But he said: “We believe the administration has opened the door for other ideas to be considered. It’s a legislative process. Whatever the president lays out is not going to be the final bill.”

Mr. Mortimer said the scope of Mr. Biden’s spending proposals appears to be “in line with what we need to do not just to fix our physical infrastructure, but to encourage innovation, to bring clean energy online. The numbers that are being bandied about, they’re high, no doubt about it, but they’re in line with the needs.”

Many Democrats want Mr. Biden to spend even more, or to cut taxes for some residents of high-tax states as part of his plans. On Tuesday, Democrats in both chambers were continuing to pelt the White House with demands for specific policy initiatives to be included in the legislative package, including multiple letters outlining requests for investments in housing initiatives and home and community services.

The factions within the Democratic caucus will most likely make the path for final approval of the package more difficult, given the party’s extraordinarily slim margins in both chambers.

Three House Democrats issued a joint statement vowing to oppose any changes to the tax code that did not address the so-called SALT cap approved in the 2017 tax overhaul, which imposed a limit on the local and state taxes that can be deducted from federal income taxes.

“We say, ‘No SALT, no deal,’” said the lawmakers, Representatives Tom Suozzi of New York, and Josh Gottheimer and Bill Pascrell Jr., both of New Jersey. “We will not accept any changes to the tax code that do not restore the SALT deduction and put fairness back into the system.”

Liberal lawmakers were also continuing to push for substantial spending. Representative Alexandria Ocasio-Cortez, Democrat of New York, suggested on Twitter that on the heels of the $1.9 trillion pandemic relief package, which allocated funds largely for 2021 and into the next two years, that $2.25 trillion could be insufficient.

But Republicans are already balking at such a large price tag, potentially driving Democrats to use the reconciliation process to bypass them.

“It’s not just about the money — it’s also about the transformative policy that’s going to be incorporated into it,” Representative Pramila Jayapal of Washington, the chairwoman of the Progressive Caucus, said during a call with reporters on Tuesday, adding that she was encouraged by the initial details emerging from the proposals. “We are going to continue to push for it to really reflect the size of investment that we think is necessary.”

Source: Economy - nytimes.com


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