Corporations should help pay for infrastructure in a return to historic levels of taxation, Treasury Secretary Janet Yellen said Tuesday, in remarks met with immediate pushback from the country's biggest business lobbying group.
Yellen pushed the Biden administration's American Jobs Plan and American Families Plan, which include more than $4 trillion for infrastructure, education and other provisions to help American families and workers, in her address to the U.S. Chamber of Commerce's Global forum on Economic Recovery. Yellen said the United States has not maintained its infrastructure, let alone modernized it, sufficiently supported public research and development to maintain a technological edge, invested in education and training or built the support systems families need.
"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," Yellen said.
The Biden administration is proposingfor infrastructure with an increase to the corporate tax rate to 28% from 21%, increasing the global minimum tax rate on U.S. multinational corporations, as well as working with other nations to implement a global minimum tax and several other changes to help close loopholes. Yellen said corporate taxes are at a historic low, just 1% of GDP.
"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 said.
However, her remarks were immediately met by pushback from the forum's host, which has slammed the proposal to increase corporate taxes. Chamber President and CEO Suzanne Clark said the proposed tax increases would "greatly disadvantage" U.S. businesses and workers.
"Now is certainly not the time to erect new barriers to economic recovery," Clark said. "The administration is right to champion infrastructure, and we want to be there with them to do that, but there are other ways to finance it."
The pushback comes as lawmakers on Capitol Hill debate ways to pay for infrastructure this week, which could prove a major sticking point to moving forward on infrastructure in a bipartisan manner. On Tuesday, the Senate Finance Committee held its own hearing on financing options.
"It's long past time for mega-corporations to pay a fair share for building and repairing roads and bridges," said Committee Chairman Ron Wyden in prepared remarks, noting they use America's roads and highways and ship products through airports and ports. "They ought to pitch in for the infrastructure that makes America an economic superpower. The hard evidence, however, shows that these mega-corporations have never contributed less to federal revenues in modern American history than they do now."
But Republicans have taken a hard line on raising corporate taxes — a move that would reverse the tax law passed under President Trump in 2017.
"Consideration of offsetting the cost of infrastructure with a corporate tax rate increase or increases in international taxes, especially coming out of the largest negative shock to the economy on record, is counterproductive and a non-starter on my side of the aisle," Ranking Member Mike Crapo said.
Some GOP lawmakers have proposed so-called "user fees" to pay for infrastructure, but Democrats have pushed back indicating that would raise costs on American workers.
The debate on paying for infrastructure continues in the House on Wednesday.