Biden drops corporate tax increase and cuts infrastructure plan by over $1 trillion in negotiations with Republicans
In private talks with Republicans at the White House on Wednesday, President Joe Biden offered to dramatically reduce his $2.25 trillion infrastructure package by eliminating a proposed corporate tax increase and cutting the total spending in the plan by more than half.
According to a report published by the Washington Post Thursday afternoon—based on information from an anonymous person familiar with Biden’s closed-door meeting with lead Republican negotiator Senator Shelley Moore Capito of West Virginia —the President outlined “a plan for about $1 trillion in new spending” and said “he could take the proposed rate increase off the table in an attempt to broker a compromise” with Republicans.
From the moment Biden announced the infrastructure bill, called “The American Jobs Plan,” on March 31, the Republicans declared it a nonstarter due to the proposed tax provisions. Biden had originally called for raising the corporate rate from 21 percent to 28 percent, partially reversing the cuts engineered by the Trump White House and Republicans in Congress in 2017.
While Biden’s original proposal is entirely inadequate to address the decaying, neglected and crumbling US roads, bridges, rails, pipelines, ports and information infrastructure, the Republicans have attacked it as being too costly and have called for an amount far below $1 trillion.
The White House has repeatedly appealed to the GOP to negotiate while simultaneously offering to scale back the plan in response to every objection from congressional Republicans. On May 27, White House Press Secretary Jen Psaki issued a statement praising the work of Senator Capito “and her colleagues,” many of whom do not consider Biden to have won the 2020 presidential election or to have taken office legitimately.
Psaki’s statement said: “It is encouraging to see her group come forward with a substantially increased the [sic] funding level—nearing $1 trillion. We appreciate the hard work that went in to making this proposal and continuing these negotiations.” By that point, Biden had already agreed to cut the infrastructure proposal down to $1.7 trillion.
The Washington Post’s unnamed source reported that Biden still “intends to seek the tax increase” and that the White House “could pursue the policy outside of the infrastructure debate—or in the case that bipartisan negotiations ultimately collapse.”
Biden’s alternative tax plan “would amount to a new minimum corporate tax of 15 percent” and “take aim at dozens of profitable US corporations that pay little to nothing to the federal government annually.” The Post report continued, “The White House also proposed stepping up enforcement on corporations and wealthy earners who rely on loopholes to lessen their tax burdens, according to the person familiar with the talks.”
After news of Biden’s infrastructure climbdown became public, the White House reported that additional talks took place on Friday. The press statement said the president met with Senator Capito and House Transportation Committee Chairman Peter DeFazio (Democrat from Oregon), and that they discussed a new offer from Republicans for a “$50 billion increase in spending across a number of infrastructure programs.” The statement continued, “The president expressed his gratitude for her effort and good will, but also indicated that the current offer did not meet his objectives to grow the economy, tackle the climate crisis, and create new jobs.”
The meeting with DeFazio was significant in that the congressman has advanced a surface transportation reauthorization bill in the House that would provide $547 billion in funding for infrastructure over five years without Republican support. The White House press statement said, “The President and Chairman DeFazio agreed on the benefits of continued engagement with Democratic and Republican Senators as the House work on infrastructure advances this coming week.”
Talks between the White House and Republicans are scheduled to continue on Monday, although the events on Friday have increased the likelihood that a bipartisan agreement will fall apart. While the Democrats have the ability to overcome Republican opposition by using the budget reconciliation process, they are refusing to use this option.
The pivotal role of West Virginia Democratic Senator Joe Manchin emerged again on Thursday when he said that he would not support passing the infrastructure package through budget reconciliation, a procedure in the Senate that requires a simple majority instead of the 60 votes needed to overcome a filibuster.
Manchin called the notion of proceeding on a major piece of legislation without GOP support “a disaster waiting to happen.” Without Manchin’s support, Democrats do not have the 51 votes—including the tie-breaking vote of Vice President Kamala Harris—in the Senate needed to pass the bill under the budget reconciliation procedure.
The ongoing insistence by the White House on the necessity for collaboration with Republican supporters of the coup attempt of January 6, and the speed with which Biden has dispensed with major provisions of his infrastructure bill, expose the Democrats’ claims that the “American Jobs Plan” will “rebuild a new economy” and “create millions of good jobs” to be a fraud.
IRS data shows: US billionaires’ true tax rate far lower than that of workers
On June 8, ProPublica published the first in a projected series of articles documenting the massive scale of legally sanctioned tax evasion carried out by America’s ever-expanding class of billionaires. The article, based on an exhaustive study of leaked Internal Revenue Service (IRS) documents, focuses on the period from 2014 through 2018. It demonstrates that in the course of those five years, the 25 richest Americans paid federal taxes on their increased wealth at a far lower rate than the typical US household.
The report also cites tax data on billionaire oligarchs such as Jeff Bezos, Warren Buffett, Elon Musk and Michael Bloomberg going back to the first decade of the current century, showing that they paid little or no taxes regardless of which big business party—Democrats or Republicans—occupied the White House. It explains as well that even were the Biden administration to carry out its promised increases in income tax rates for the rich, the impact on the vast fortunes of today’s robber barons would be minimal.
The authors state that in determining the increased wealth of America’s “top 0.001 percent,” they included not simply their salaries, which in many cases comprise only a small share of their actual income, but also “investments, stock trades, gambling winnings and even the results of audits.”
The result, they note, demolishes “the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most.” They continue: “The IRS records show that the wealthiest can—perfectly legally—pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.”
ProPublica’s revelations provide insight into how the capitalist system and its various state institutions and rigged legal system promote a parasitic financial aristocracy that lives in a world apart from the rest of humanity. Unlike workers, who depend on their wages to survive and pay the full income tax rate, the ultra-wealthy avoid taxes by obtaining massive loans from banks, borrowing against the value of their ever growing and artificially inflated assets, such as stocks and real estate, which are not taxable until they are sold.
In order to calculate what ProPublica terms the “true tax rate” of the 25 richest Americans, the report compares how much in taxes these individuals paid over a given period to how much their wealth grew, using wealth estimates published by Forbes magazine.
Between 2014 and 2018, Forbes estimated that these 25 people saw their wealth increase collectively by $401 billion. The documents obtained by ProPublica show that these same individuals collectively paid $13.6 billion in federal income taxes over the same time period, for a true tax rate of only 3.4 percent. By contrast, ProPublica found that between 2014 and 2018, a typical US worker in his or her 40s experienced a net wealth expansion of about $65,000. That same worker’s tax bills “were almost as much, nearly $62,000, over that five-year period.”
Over that same period, according to ProPublica, Warren Buffett’s wealth increased by $24.3 billion, but the Berkshire Hathaway mogul paid only $23.7 million in taxes, resulting in a true tax rate of 0.10 percent.
Amazon boss Jeff Bezos’ wealth soared by a staggering $99 billion, but he paid just $973 million in taxes, yielding a true tax rate of less than 1 percent.
Tesla CEO Elon Musk is another “pandemic profiteer.” He saw his wealth skyrocket this past year, in part by violating a state-ordered shutdown and illegally restarting production at the Fremont, California, Tesla factory, leading to hundreds of coronavirus infections. Between 2014 and 2018 his wealth grew by $13.9 billion, while he paid $455 million in taxes, resulting in a true tax rate of 3.27 percent.
The reporting confirms the Marxist analysis of the capitalist state, described in the Communist Manifesto as “… a committee for managing the common affairs of the whole bourgeoisie.” The various loopholes and tax avoidance schemes employed by the ruling class are legal, have been for decades, and will continue to be so under Biden or any other Democratic administration.
As then-candidate Joe Biden assured wealthy donors at a Manhattan campaign fundraising event in January 2019, should he become president, “no one’s standard of living will change, nothing would fundamentally change.” Nearly six months into his presidency, Biden has kept his promises to his wealthy benefactors, as evinced by his recent retreat from his proposal to raise corporate taxes by a few percentage points.
Among other facts included in the ProPublica report:
- Bezos, the world’s richest man, did not pay a penny in federal income taxes in 2007 and 2011. In 2011, despite his overall wealth holding steady at $18 billion, Bezos filed a tax return in which he claimed to have lost money. The IRS not only approved the billionaire’s tax return, it granted him a $4,000 tax credit for his children!
- Musk, now the second richest person in the world, did not pay any federal income taxes in 2018.
- Former New York City Mayor Michael Bloomberg, as well as billionaire investors Carl Icahn and George Soros, have also had years when they paid nothing in federal income taxes. Soros, worth an estimated $8.6 billion as of March 2021, paid no federal income taxes for three years in a row.
According to the ProPublica report, when the super-rich do pay something in income taxes, their true tax rate is far lower than that of the typical working class household, with a median income of $70,000. For instance, between 2006 and 2018, while Bezos’ wealth surged by over $120 billion, he paid, on average, $1.09 in taxes for every $100 in wealth growth. But over the same period, the median American household paid $160 in taxes for every $100 in wealth growth—paying more in taxes than it gained in wealth.
Overall, ProPublica found that the richest 25 Americans pay a far lower income tax rate, an average of 15.8 percent of adjusted gross income, than do many workers, once taxes for Social Security and Medicare are included. To highlight the point, ProPublica found that by the end of 2018, the 25 richest Americans were worth $1.1 trillion and collectively paid a federal tax bill of $1.9 billion.
The $1.1 trillion in collective wealth hoarded by 25 people equals the combined annual wages of roughly 14.3 million American workers, who in 2018 paid $143 billion in federal taxes, or over 75 times more than the billionaires.
On Tuesday, in response to a reporter’s question about the ProPublica report, White House Press Secretary Jen Psaki had nothing to say about its damning content. Instead, she threatened criminal prosecution of those who leaked the IRS documents to ProPublica.
“Any unauthorized disclosure of confidential government information by a person of access is illegal and we take this very seriously,” said Psaki. She added that the IRS commissioner has referred the matter to investigators and that the FBI and Justice Department would also be investigating.
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