With conflict abroad and midterms ticking closer, the president has a very narrow window to right both his political fortunes and legislative agenda.
President Biden’s budget proposal landed with a familiar thud on Capitol Hill this spring. In and of itself, this was not altogether that surprising. Most presidential budgets are aspirational in nature and face the Congressional meat-grinder before ever becoming law. But it was still surprising to see the administration use the budget introduction to default back to a series of stale tax proposals — chief among them a sizeable hike in the corporate tax rate — that have long been disregarded as a combination of bad politics and bad policy. Recycling them was neither subtle nor savvy, as they were known to be DOA.
As Congress returns to Washington after the Memorial Day recess, speculation will be rampant over where negotiations stand on a reconciliation package and how to pay for it. Democrats desperately need a win, and they need to deliver on at least some of their campaign promises before voters go to the polls in November. Sen. Joe Manchin (D-W.Va.) seems justifiably concerned about record-high inflation which may give Democrats an opportunity to finally eke out a deal… if Democrats don’t get in their own way.
The president and Democrats in Congress should forget about a divisive corporate tax rate increase. Raising the rate does not have majority support in Congress, and more importantly, fails to achieve the administration’s stated goal of tax fairness as it would disproportionately fall on full-freight payers like retailers who already pay their fair share in corporate taxes.
Instead, if the president is serious about advancing his domestic policy priorities, he should revisit the text from his State of the Union. On a broad bipartisan basis, the American people believe it is unfair when a highly profitable company pays little to nothing in federal corporate taxes. A domestic minimum tax placed on such companies is widely supported by voters in both political parties and should be included in any proposal that makes it to the president’s desk.
Retailers are strong advocates for a competitive corporate tax rate, where all profitable companies contribute to the needs of the nation. Rates can stay where they are if all entities making large profits are paying taxes. We support a well-crafted domestic minimum tax that corrects the inequities in the current code which currently allows many companies to legally pay nothing in federal taxes while retailers and other industries (not to mention individuals) pay full freight. If the president returns to the goal of achieving tax fairness, he can score a significant political victory.
In an evenly divided Senate, focusing on tax fairness is the smartest way to fund a large portion of the president’s domestic agenda before the midterms. And for many of those policies, there isn’t time to waste. The president’s agenda includes a significant investment in a 21st century energy economy to better fight the growing threats of climate change, which retailers agree deserves immediate attention.
Addressing the uneven burdens in the current tax code, combined with reducing the tax gap by collecting taxes already owed, is enough to reduce the deficit and fund significant investments in the president’s domestic agenda.
Tax fairness, deficit reduction and major investments in fighting climate change — this is a triple lindy opportunity for the president and Democrats, and now is the time to stick the landing. They just need to seize the opportunity that’s right in front of them.
Hana Greenberg is the vice president of tax at the Retail Industry Leaders Association.