Lawmakers in Congress are still in the process of closing a deal on President Biden’s multibillion-dollar spending program that would increase funding for infrastructure and clean energy, as well as social spending initiatives.
The president said this week that he had agreed to cut the gigantic price tag by $ 3.5 trillion, and reports suggest lawmakers will land somewhere between $ 1.75 trillion and $ 1.9 trillion.
But some Democratic lawmakers, like Sen. Kyrsten Sinema, D-Az., Have said they won’t agree to a package that includes corporate tax hikes and top earners.
Here’s how the Biden administration offered to pay for the plan:
WHITE HOUSE EMPHASIZES CORPORATE TAX HIKING STILL ON THE TABLE IN THE EXPENDITURE ACCOUNT
Minimum corporate tax
Biden has advocated for a minimum 15% corporate tax at all levels, a move according to the administration that will ensure large companies do not bypass paying their “fair share.”
“Some of the biggest American companies pay literally nothing in income taxes,” press secretary Jen Psaki told reporters on Friday. “Fifty-five of the biggest companies – they pay lower rates than salaried families. We can stop this by imposing a minimum tax of 15%, a minimum corporate tax to ensure that large corporations pay their fair share.
The original $ 3.5 trillion package included an increase in the corporate tax rate to 28%, but as the president said in a town hall on Wednesday, “it’s all about compromise.”
“I am a capitalist. I hope you can be a millionaire or a billionaire,” he added. “But at least pay your fair share. Add a little. “
Global minimum tax
Psaki said the president and lawmakers are considering a global minimum tax to prevent companies from forgoing tax payments using offshore accounts.
“The president believes that – [and] a number of other members of Congress think – that we need to stop rewarding companies that outsource American profits and jobs, ”Psaki told reporters. “It will help make the United States more competitive and end the race to the bottom. “
The push for a global minimum tax rate comes as 136 countries agreed to apply a 15% corporate tax to make it harder for multinational corporations to circumvent the tax.
Over 90% of the global economy, including the United States, has agreed to target companies that escape tax obligations in their home country by shifting their profits to low-tax countries, such as the Cayman Islands and Bermuda – a practice that costs the United States tens of billions of dollars each year, according to the Treasury Department.
HOW WILL THE WORLD’S MINIMUM TAX RATE WORK?
Closing Medicare Tax Loopholes
“We can also close loopholes for high-income Americans, including a loophole that allows some taxpayers – like hedge fund managers – to escape a Medicare tax imposed on all high-end income,” noted Psaki Friday.
The press secretary was referring to the fact that managers of hedge funds and private equity funds were not required to pay Medicare payroll taxes every year.
According to the National Women’s Law Center, the funds are using a loophole to “pay a federal tax rate on their compensation lower than that of ordinary American workers.”
All employees in the United States are subject to a 1.45% payroll tax for Medicare expenses, but capital gains are not subject to the same tax.
Hedge funds and private equity managers are able to reflect the profits made for their services as capital gains by treating the funds as “deferred interest”.
Capital gains require a 15% income tax, which means investment programs avoid paying the full corporation tax – which under former President Trump was lowered by 35% to 21%.
They also completely avoid paying Medicare tax.
AGS STATUS ADVISE OF CHALLENGE IF BIDEN BANQUE DATA COLLECTION IS SUCCESSFUL
Fighting Tax Evasion Through Monitoring IRS Bank Accounts
Democrats have backed a proposal to require banks to report every year for any transaction over $ 10,000.
The move is aimed at preventing tax evasion and would require financial institutions to turn over accounts receivable information to the Internal Revenue Service.
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“We can crack down on the wealthy tax evaders who take advantage of every honest taxpayer and invest in law enforcement to prevent 1% from evading $ 160 billion in taxes a year, which the Secretaries of the Treasury – Republicans and Democrats – have expressed support and are feeling it – is an important part of the proposal, ”Psaki said.
But some conservatives have expressed concern over the proposal, saying it is an invasion of privacy.
Of the four proposals in total, Republican Senator Dan Sullivan from Alaska told Fox News’ David Asman on Saturday that the revenues would not be enough to pay for the new spending. Biden’s claim that the bill will cost “zero” is “bogus,” Sullivan said.
Megan Henney and Fred Lucas of FOX Business contributed to this report.