Biden Proposes Corporate Tax Rate Compromise at '25%'... "Ready to Compromise" (Summary)

Republicans Firmly Oppose 28% Increase Plan
Funding for Over $4 Trillion Stimulus Package Remains an Issue

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] U.S. President Joe Biden has publicly proposed a compromise plan to raise the corporate tax rate to around 25%, lower than his original campaign pledge of 28%. This move is interpreted as a step back from his initial stance after the Republican Party in Congress opposed a sharp increase in corporate taxes and pressured that Biden’s infrastructure investment bill could not pass. As the Biden administration’s corporate tax hike plan retreats, there are growing forecasts that the funding for the previously announced massive $4 trillion (approximately 4,487 trillion KRW) stimulus package will be impossible to implement without additional fiscal deficits.

According to foreign media including CNN on the 6th (local time), President Joe Biden said in a speech held in Lake Charles, Louisiana, "Raising the corporate tax rate to between 25% and 28% would help secure funding for the infrastructure investment bill," and added, "I am ready to compromise." This is the first time Biden has publicly indicated that he might adjust his campaign pledge of a 28% corporate tax rate made during the last presidential election.

As the U.S. Republican Party opposed the infrastructure investment bill itself, arguing that the corporate tax rate hike is excessive, it is interpreted that President Biden had no choice but to propose a compromise plan. Senate Minority Leader Mitch McConnell emphasized the day before that the proposed corporate tax increase was excessive and stated, "Neither of the two stimulus plans proposed by President Biden will receive a single Republican vote." It is known that Democrats and Republicans in Congress continue to negotiate over the corporate tax rate hike and the passage of the infrastructure investment bill.

The U.S. corporate tax rate was lowered from 35% to 21% when the previous Donald Trump administration took office. President Biden announced a massive stimulus package exceeding $4 trillion, including the $2.25 trillion ‘Jobs and Infrastructure Investment Bill’ and the $1.8 trillion ‘American Family Plan,’ stating that the necessary funding would be secured by raising the corporate tax rate to 28%, which has continued to stir controversy in U.S. political circles.

As the Biden administration’s corporate tax hike plan is expected to retreat, concerns are growing that a large-scale fiscal deficit will additionally occur. Earlier, on the 12th of last month, the U.S. Treasury Department announced that the fiscal deficit for the first half of the 2021 fiscal year reached a record high of $1.7 trillion. This fiscal deficit did not include the infrastructure investment bill or the American Family Plan.

This content was produced with the assistance of AI translation services.