Janet Yellen urges businesses to support corporate-tax hikes to fund Biden’s infrastructure plan

Janet Yellen
Janet Yellen. Andrew Harnik/AP Photo
  • Treasury head Janet Yellen spoke with the Chamber of Commerce to pitch Biden’s infrastructure plan.
  • She urged them to support corporate-tax hikes – something the chamber spoke out against in March.
  • Biden expressed willingness to compromise on the tax hike’s size but remains firm on keeping it.
  • See more stories on Insider’s business page.

Now that the entirety of President Joe Biden’s $4 trillion infrastructure plan has been unveiled, his administration is canvassing for support. Treasury Secretary Janet Yellen was the most recent member of Biden’s administration to make the case.

On Monday, Yellen delivered a speech to the Chamber of Commerce, which supports the interests of businesses, urging them to support Biden’s infrastructure plan. Biden originally proposed funding the plan through a corporate-tax hike to 28%, and given fierce Republican opposition to that idea, he has expressed willingness to negotiate on the size of the tax hike, but he is remaining firm on raising taxes on wealthy people and corporations.

Yellen told the chamber that with corporate taxes at a historic low of 1% of gross domestic product, “we believe the corporate sector can contribute to this effort by bearing its fair share: We propose simply to return the corporate tax toward historical norms.”

“We are confident that the investments and tax proposals in the jobs plan, taken as a package, will enhance the net profitability of our corporations and improve their global competitiveness,” Yellen added. “We hope that business leaders will see it this way and support the jobs plan.”

The Chamber of Commerce won’t be easy to convince. At the end of March, after Biden unveiled the American Jobs Plan, it called the plan “dangerously misguided” for proposing tax increases.

“Properly done, a major investment in infrastructure today is an investment in the future, and like a new home, should be paid for over time – say 30 years – by the users who benefit from the investment,” the group said.

“We strongly oppose the general tax increases proposed by the administration which will slow the economic recovery and make the U.S. less competitive globally – the exact opposite of the goals of the infrastructure plan,” it added.

While Democrats and Biden support tax hikes because they say it will level the playing field for the middle class, Republican lawmakers have been adamant that they won’t support any plan funded by that particular tax hike, which would roll back a key accomplishment of former President Donald Trump’s 2017 tax cut. For example, after meeting with Biden in the Oval Office last week, Senate Minority Leader Mitch McConnell told reporters that a corporate-tax hike was out of the question.

“We’re not interested in reopening the 2017 tax bill. We made that clear to the president,” McConnell said at a news conference. “That is our red line.”

A group of GOP lawmakers, led by Sen. Shelley Moore Capito of West Virginia, introduced a $568 billion counterproposal to Biden’s plan last month that would be funded without any tax hikes. That group also met with Biden last week, and the president gave it a Tuesday deadline to bring him a new counterproposal that they could restart negotiations on.

“The president asked us to come back and rework an offer so that he could then react to that,” Capito told reporters after the meeting on Thursday.

The GOP group is considering funding the plan through “user fees,” a set of charges levied on the users of a federal service or good, such as raising the federal gas tax. User fees also have the support from the Chamber of Commerce.

Both Biden and Republicans are hoping to reach a bipartisan deal by Memorial Day, ahead of House Speaker Nancy Pelosi’s timeline to bring a bill to the House floor by July 4.

“Let’s build back better together – and build something that lasts for generations,” Yellen said. “We Americans deserve a better deal.”