Corporate America tears down Biden's infrastructure plan

Top executives at companies who have made speeches about the need for infrastructure spending in the past are largely silent and decide to privately complain that Biden’s plan is too expensive, too partisan, laden with unrelated social policies, and not that at all what they were up to. Jeff Bezos, CEO of online retail company Amazon, made a statement on Tuesday at first sight that seemed to be a confirmation of Biden’s plan.

Except that it wasn’t.

Bezos, like other CEOs, nodded at the acceptance of a higher corporate tax rate – although he actually put his name behind it. However, he remained far from expressly supporting Biden’s infrastructure proposal and instead called for a “balanced solution” to increase the competitiveness of the USA. Below the surface, the corporate world generally despises Biden’s plan in its current form and is fixated on its failure.

“This plan would make America less competitive, which would mean less US economic growth and less job creation,” said Neil Bradley, chief policy officer at the Chamber of Commerce. “The benefits of the infrastructure would be offset by tax increases. And if they only cast democratic votes, the concept of doing something non-partisan would be over and would only reinforce the kind of deadlock that has prevented progress on all other issues. “

Executives of some of America’s largest corporations complain much more bitterly in private about the White House’s approach, arguing that increasing the top corporate rate from 21 percent to 28 percent – without restoring the deductions removed in then-President Donald Trump’s 2017 tax cut bill – would do damage Setting and the economy.

And they say that introducing a global minimum tax that other countries may not introduce would bring more jobs and profits from the US. They also complain of a lack of adequate outreach for the business community before the infrastructure plan was put in place, and fear that Biden will give up his campaign promising to work bipartisan on such comprehensive legislation.

Executives often say they could live on a corporate tax rate of around 25 percent – which groups like the Business Roundtable previously supported – but only with deductions restored and without much of international reform.

“I didn’t think 21 percent was the right number when we went through the tax reform. And 25 percent is a place where you could probably get a lot of consensus,” said the CEO of one of the world’s largest financial firms on the condition that they’re not named. “It’s not the rate, it’s all the other things that would make us less competitive around the world.” And jobs will go if we do this stuff. “

The CEO added that the business community in general does not lag behind a bill that is only pushed through the budget vote process with democratic backing – a maneuver that allows legislation to clear the Senate by simple majority – which is the whites House passed earlier with $ 1.9 trillion stimulus bill.

“It really matters whether this is completely biased. It sounds clichéd, but business people really want to sit in the middle and get behind things that are supported by both parties, ”said the CEO. “Biden made a lot of promises to do this stuff differently. But even though it has a glossier veneer, much of it seems like Trump is doing everything his own way. “

A senior manager at a Fortune 100 technology company said it was easy for Amazon and other companies to nod at their willingness to pay a higher overall corporate rate. But the executive said the corporate world would oppose much of the rest of the proposal.

“None of these people can realistically resist a quota of 25 percent with a serious face,” said the managing director. “This is not the fight. Anyway.”

Both executives say that outside of a hastily arranged conference call, shortly before Biden launched his “American Jobs Plan,” there wasn’t much business contact, a complaint that haunted former President Barack Obama during his two terms in office.

The White House largely rejects these complaints. Administrative officials note that many executives, including Jamie Dimon, CEO of JPMorgan Chase previously supported a top corporate rate of 25 percent, only a little shy of the 28 percent suggested by Biden.

They also say that 2012 GOP presidential candidate Mitt Romney ran on one platform with a top rate of 25 percent and that Trump National Economic Council director Larry Kudlow largely praised the Romney plan.

According to government officials, White House advisers, Cedric Richmond, who heads the public engagement office, and Brian Deese, director of the National Economic Council, had a chat with the heads of Bank of America, State Street, Wells Fargo and Goldman Sachs on the Infrastructure hit Schedule a meeting organized by the Financial Services Forum.

They also say Richmond and Deese briefed 25 CEO members of the Business Roundtable. Other officials spoke to trade groups such as the National Association of Manufacturers and the Aerospace Industries Association, as well as executives from leading Internet broadband companies and representatives from the agricultural sector.

In a broader sense, White House officials say that while Biden is required to cover a large portion of the cost of the $ 2.5 trillion plan, he realizes that a conversation about how exactly to do it is only just beginning begins.

The White House is still hoping to get a bipartisan deal at some point, even if all the signals currently indicate that Biden is ready to sign a bill with only Democratic support.

“We want to work with briefings and discussions with GOP lawmakers about the aisle,” said NEC Deputy Director David Kamin. “When it comes to corporate tax reform the president has brought this up and this is his idea of ​​how it could be paid, but he is really ready to hear other ideas.”

Kamin added, “If others have ideas that they want to bring forward, they should be part of the discussion.”

Perhaps the biggest fear in America right now is the idea of ​​a minimum tax of 21 percent on foreign income for US companies. Executives and conservative economists say this would put American companies at a significant disadvantage and prompt US companies to look again for company “inversions” that include addresses overseas.

Treasury Secretary Janet Yellen on Monday called on developed countries to introduce a global minimum tax to mitigate any anti-competitive disadvantages that Biden’s proposal could cause.

A global minimum tax has been debated for years, according to corporate groups, and there is no guarantee that an agreement will be reached anytime soon. “Sure, it would be great if we had a system in which all advanced countries work in harmony,” said a tax expert who works with companies that oppose Biden’s plan in its current form. “But we’ve talked about it for years, and tax competitiveness and the right to set your own tax rates have always been a major national sovereignty issue for other governments.”

The White House, in turn, says its plan is encouraging but not based on an international tax treaty. “We are countering this with a reform: If you are a foreign company based in a country that does not introduce a minimum tax, you will be denied deductions,” said Kamin. “That means we’re actually leveling the playing field.”

While the White House criticizes business leaders who previously talked about infrastructure spending and are now reluctant to pay for it, executives suggest that the administration should cut the price and find other mechanisms to pay for the plan, including fees for the users of new infrastructure.

And they fear that much of the changes will be wiped out if a partisan-based bill is jammed and wiped away the next time the GOP controls government levers.

“You risk repeating what Republicans did when they did it on their own,” Bradley said. “If we did, Republicans could return the favor and we would have no long-term changes.”

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