Lowered Voice Biden Says "There Is Room for Corporate Tax Negotiation"

Initial 28% Target May Be Revised
Strategy Change Possible Amid Opposition Within Democratic Party
Two-Track Strategy Emphasizing Importance of Infrastructure Investment
Ministry of Finance Expands Scope of 15% Minimum Tax Rate Application

[Image source=EPA Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] U.S. President Joe Biden has expressed that he is not fixated on raising the corporate tax rate from 21% to 28%. This move is interpreted as considering opposition not only from the Republican Party but also within the Democratic Party.

On the 7th (local time), after delivering a speech on the necessity of tax increases for a $2.25 trillion infrastructure investment, President Biden responded to the question, "Will you consider a lower tax rate?" by saying, "I am willing to listen."

President Biden also emphasized his intention to cooperate with the Republican Party, stating, "I am not married to 28%."

U.S. media interpreted this as a stance that the administration could agree on a corporate tax rate lower than the initially targeted 28%.

Gina Raimondo, Secretary of Commerce, also attended the White House press briefing and said, "There is room for compromise regarding the 28% corporate tax rate."

In the document titled "Made in America Tax Plan" released by the U.S. Treasury Department on the same day, there was also an indication that a lower tax rate than originally planned could be applied.

The Treasury is also considering applying a 15% minimum tax rate to companies with book profits exceeding $2 billion but with little taxable income. In this case, about 180 companies would be subject, and it is estimated that only 45 companies would actually be taxed.

This is a revision of the original plan to apply the tax to companies earning more than $100 million in profits. Considering that the number of publicly listed companies earning over $100 million initially planned was about 1,100, the target group has been significantly reduced.

The Wall Street Journal (WSJ) reported, "The Biden administration has eased its tax plan on profitable companies."

The Biden administration's change in stance on raising the corporate tax rate to 28% is interpreted as considering opposition from Congress.

Amid Republican opposition, Senator Joe Manchin, a leading conservative within the Democratic Party, argued that a 28% corporate tax rate is excessive and that 25% is appropriate. Senator Manchin also revealed that there are 6 to 7 Democratic senators who agree with his opinion.

With the Democratic Party holding only 50 seats in the Senate, if Senator Manchin opposes, President Biden's 28% corporate tax rate will lose momentum.

Separately from opinions on the corporate tax rate increase negotiations, President Biden and U.S. officials actively emphasized the necessity of tax increases and infrastructure investment on the same day.

President Biden asserted, "We are not just fixing today; we must build tomorrow. This is not about trimming edges but a once-in-a-generation investment in America."

President Biden also said, "Do you think China will wait when it comes to digital infrastructure or research and development (R&D) investment? I assure you, they will not wait."

Janet Yellen, Treasury Secretary, through a WSJ op-ed and press briefing, stated that tax cuts have not contributed to U.S. growth and job recovery, emphasizing, "Instead of competing with Switzerland and Bermuda by lowering tax rates, we must focus on securing advanced infrastructure and capable workforce."

Meanwhile, the Treasury Department's released document also included plans to raise the global minimum corporate tax rate to 21% and to eliminate provisions that cause outsourcing of U.S. manufacturing. The Treasury also stated its position to impose a 21% tax rate on overseas income of U.S. companies.