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The corporate tax rate increase to 28% proposed by President Biden alongside the American Jobs Plan infrastructure proposal was a main topic of discussion during his April 19 meeting with members of Congress. The President said at the start of the meeting, "I've noticed everybody is for infrastructure. The question is: Who's going to pay for it? And that's what we're going to try to work out today, at least in this bipartisan group of members of the House and Senate … I asked senators and congressmen who had either been governors or mayors because they know what it's like to make things work, to make sure that you get things done and deal with infrastructure … " In reports based on comments from meeting attendees:

• Sens. Mitt Romney (R-UT) and John Hoeven (R-ND), the only two GOP senators in the meeting, told President Biden they are opposed to increasing the corporate tax rate to pay for his infrastructure package, Axios reported.
• Rep. Charlie Crist (D-FL) said lawmakers discussed the potential for some "compromise wiggle room" on raising the corporate rate — "You could see a 2 or 3% increase, maybe not all the way to 28 but 25" — while Sen. Jeanne Shaheen (D-NH) said the group also raised the possibility of creating a national infrastructure bank and closing the current gap between taxes owed and taxes paid to help bring in revenue, the Wall Street Journal (WSJ) reported.
• Politico said Biden stood by the 28% corporate rate but left the door open to continue negotiating, Rep. Crist said Biden didn't "rule it out" but said "he feels pretty strongly about that," and Rep. Norma Torres (D-CA) said "the President challenged Republicans who said they're not comfortable with the corporate tax increase [to] put a plan on the table, a real plan with a pay-for" by mid-May.
• An FT reporter tweeted that Crist said Biden was a "bit skeptical" of dropping the corporate rate target from 28% to 25% and "talked about the fact that a lot of corporations aren't paying any tax."
• Senator John Hickenlooper (D-CO) said on MSNBC April 19, "There's certainly a level of coolness towards bringing that corporate tax back up … It came down 14 points. He's putting it back to about the middle … "

The Washington Post reported April 19 that the American Families Plan follow-on proposal addressing health care, childcare, education, family leave and other issues:

• is expected to be unveiled ahead of President Biden's address to a joint session of Congress on April 28;
• calls for roughly $1 trillion in spending and $500 billion in new tax credits;
• includes an extension of the expanded child tax credit through 2025; and
• "is expected to be largely if not fully paid for with new tax increases centered on upper-income Americans and wealthy investors."

Tax — The topic of tax increases was raised during the Senate Finance Committee's April 20 hearing "Combatting Inequality: The Tax Code and Racial, Ethnic, and Gender Disparities," including by witness Mihir Desai of Harvard, who in testimony raised concerns about literature that exaggerates the "purported hidden hundreds of billions in offshore tax havens" and feeds "a common and mistaken narrative today — that somehow responsible fiscal policy is just about getting the rich and corporations to pay their fair share via novel instruments including a wealth tax and multilateral cooperation on corporate tax policy."

During Q&A, Desai said, "I think it would be useful to be careful about heavily raising taxes on corporations, and, in particular, on their global activities. I think the notion that somehow there is a lot of revenue to be gained, easy money to be gained, by changing corporate rates I think is not well-founded … when American corporations succeed around the world they succeed at home. So, I think we need to kind of get away from the idea that somehow corporations are the ones that are not necessarily paying their fair share. I think that whole way of thinking about the world … . doesn't actually reflect the fact that more than half the corporate tax is borne by workers rather than capital."

Ranking Member Mike Crapo (R-ID) said in an opening statement, "It will be increasingly challenging to return to an economy as robust as we saw before the pandemic with the endless streams of tax hikes and regulation that the current Administration continues to propose." SFC member Rob Portman (R-OH) made a similar point in a WSJ op-ed, "Tax Hikes Will Stifle the Recovery," saying the Biden plan would increase the combined federal and state corporate tax rate to 32.8%, "the highest rate in the developed world," and double the tax on GILTI, making it more costly for US companies to operate and compete globally, "resulting in lost American jobs."

An April 20 Washington Post story on corporate taxes said the "evolution from tangible goods to intangible products such as intellectual property, patents, brand names, goodwill and trademarks is challenging the traditional model of corporate taxation, leading to attempts to raise revenue from companies in novel ways. European governments are pushing a new digital services tax for Internet-age leaders such as Facebook and Google, which earn enormous profits in countries where they have limited or no physical presence. 'Having a global economy that's so dependent upon intangible assets creates more opportunity to shift activities and shift income,' said Michael Mundaca, U.S. national tax department leader for Ernst & Young. 'Sixty years ago, you needed a factory or a business somewhere. Now you can realistically say the return to an asset created by smart people thinking about things can be in 50 different places.'"

The Senate Finance Fiscal Responsibility and Economic Growth Subcommittee will hold a hearing, "Creating Opportunity Through a Fairer Tax System," next Tuesday, April 27 (2:30 p.m.). Senator Elizabeth Warren (D-MA) chairs the subcommittee.

Energy — Today, SFC Chairman Ron Wyden (D-OR) will unveil the Clean Energy for America Act, which in the last Congress proposed to consolidate the current 44 energy incentives into three technology-neutral provisions that encourage clean electricity & transportation and energy efficiency.

On April 27 (10 a.m.), the SFC will hold a hearing, "Climate Challenges: The Tax Code's Role in Creating American Jobs, Achieving Energy Independence, and Providing Consumers with Affordable, Clean Energy." Witnesses:

• Jason Walsh, Executive Director, BlueGreen Alliance Washington, DC
• Maria M. Pope, President and CEO, Portland General Electric, Portland, OR
• Alex Brill, Research Fellow, American Enterprise Institute, Washington, DC
• Kevin Sunday, Director of Government Affairs, PA Chamber of Business and Industry, Harrisburg, PA

Today at noon, the House Ways & Means Committee holds a hearing, "In Their Own Words: Paid Leave, Child Care, and an Economy That Failed Women."

On Thursday, April 22 (4 p.m.), join EY tax and tax policy leaders for "Potential US international tax reform: A discussion of Biden's Made in America Tax Plan, OECD BEPS 2.0 developments and other recent proposals." Register.

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