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The current U.S. corporate income tax is among the lowest in developed countries.
U.S. Treasury Secretary Janet Yellen on Tuesday mentioned that President Joe Biden is considering an increase in the corporate income tax rate, as one of the tax proposals to offset the cost of the upcoming long-term investment plans.
"I think a package that consists of investment in people, investments in infrastructure, will help to create the jobs in the American economy and changes to the tax structure will help to pay for those programs," Yellen said at a hearing before the House Financial Services Committee.
"The stimulus package, the American Rescue Plan was not funded with any increase in taxes," she pointed out, adding that a longer-term plan probably would be accompanied by some revenue increases.
"But, once the economy is strong again, we are beyond the pandemic, President Biden is likely to propose that we engage in long-term plans to address long-standing investment shortfalls in our economy."
Yellen noted that investments in manufacturing, infrastructure, climate change, people, and research & development will make the U.S. economy more productive.
"This will be spending over a 10-year horizon and would require some additional funding," she told lawmakers.
The Federal budget deficit has ballooned to 100% of US GDP. However, due to near zero interest rates the total net interest costs to the government are still historically low. pic.twitter.com/rE7LifKo0Y
One of the tax proposals Biden would consider is to increase the corporate income tax rate back to 28 percent, Yellen said, noting that the current U.S. corporate income tax is among the lowest in developed countries.
An increase in corporate income tax, if enacted, would mark a reversal of policy from the Donald Trump administration. In late 2017, the Republican-controlled Congress passed a President Trump-advocated tax reform bill, which slashed the corporate income tax from 35 percent to 21 percent.
"Why is this country beginning to reopen and recover economically with the Biden administration preparing tax policy which would, in the end, hurt the American family and millions of struggling small businesses?" she said.
#FromTheSouth News Bits | According to a statement from White House press secretary Jen Psaki, a change in U.S. policy towards Cuba is not among the priorities of the Biden administration, despite acknowledging that some of the Trump’s policies will be reviewed. pic.twitter.com/6utFMSvMPK