sought to muster business support for the Biden administration’s package of infrastructure investments and corporate tax increases, arguing that it would put U.S. companies on a better footing to compete overseas.
“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,” Ms. Yellen said Tuesday at a U.S. Chamber of Commerce event. “We hope that business leaders will see it this way and support the jobs plan.”
has called for a $2.3 trillion infrastructure plan centered on fixing roads and bridges, expanding broadband internet access and boosting funding for research and development. To help pay for it, he has proposed raising the corporate tax rate to 28% from 21% and raising taxes on U.S. companies’ foreign earnings.
“We believe the corporate sector can contribute to this effort by bearing its fair share,” Ms. Yellen said. “At the same time, we want to eliminate incentives that reward corporations for moving their operations overseas and shifting profits to low-tax countries.”
Administration officials have been lobbying business leaders to back the infrastructure plan, saying investments in things like job training and roads would benefit companies. Republicans in Congress have said they could support a narrower plan in the range of $600 billion to $800 billion but have rejected the president’s proposal to pay for it by raising corporate taxes.
Mr. Biden, who was scheduled to speak at an electric vehicle plant in Michigan Tuesday, has said he is open to a compromise. A group of Republican senators also is meeting with administration officials Tuesday on an alternative GOP infrastructure plan.
the chamber’s chief executive, provided an immediate rebuttal after Ms. Yellen spoke. She said the administration is correct to champion infrastructure but that the chamber disagrees with the need to raise corporate taxes to finance the spending. “We want to be there with them to do that, but there are other ways to finance it,” Ms. Clark said.
“The data and the evidence are clear,” she added. “The proposed tax increases would greatly disadvantage U.S. businesses and harm American workers, and now is certainly not the time to erect new barriers to economic recovery.”
Ms. Yellen, speaking at the chamber’s online Global Forum on Economic Recovery, said U.S. corporate taxes are at a “historical low” of 1% of gross domestic product and that the administration is seeking to return them to historic norms.
Corporate taxes as a share of GDP can be misleading because over time more U.S. business activity has shifted to forms taxed under the individual income tax system. Mr. Biden’s proposed corporate tax changes would push the U.S. from the middle of the pack among major economies to near the top.
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Ms. Yellen also repeated her call for a global minimum corporate tax to “stop the race to the bottom” in which countries compete for investment by offering the lowest tax rates.
If the U.S. raises its tax rates and imposes higher burdens on foreign profits of U.S. companies, a global minimum tax would help prevent companies based in other countries from having a potential advantage.
Ms. Yellen said the U.S. needs to invest more if it is to compete globally.
“We haven’t maintained our infrastructure let alone modernized it,” she said. “We haven’t sufficiently supported public research and development to ensure that America will maintain its technological edge. We haven’t embraced the investments in education and training that we need to keep up with technological change and to compete in the international marketplace as we once did.”
Write to John McCormick at [email protected]
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