‘It looks terrible’: Democrats plot corporate tax cut as broader agenda stalls
It’s barely what Democrats had envisioned as their biggest tax achievement this election year.
Some lawmakers are acknowledging the awkwardness of moving from a list of family-friendly breaks to one that will benefit multibillion-dollar businesses, especially after long complaining that companies aren’t paying their fair share of taxes. .
Many semiconductor companies pay well below the 21% corporate tax stamp price. Intel, which would be one of the biggest beneficiaries of the plan, told investors it paid 8.5% last year.
“It looks terrible,” the senator said. Michael Benet (D-Colo.).
But many Democrats say they’re just being hands-on, pushing legislation where they have the votes, even if the things they really care about, like child credit, aren’t going anywhere.
They say bolstering the country’s ability to produce the ubiquitous chips is a matter of national security.
And Democrats like Sen. Sherrod Brown (D-Ohio) have voters who would benefit from the plan. Intel recently announced plans to build a massive new semiconductor factory in suburban Columbus.
“It will create a lot of prosperity in my state and provide a lot of people with good paying jobs,” he said.
Democrats look to the plan after sen. Joe Manchin (DW.Va.) killed much of their dreams of reconciliation, including expanding a child tax credit monthly payment program and spurring a wave of energy tax incentives. renewable. They still hope to come up with a smaller, healthcare-focused package.
Senate aims to approve semiconductor plan next week, with House Speaker Nancy Pelosi (D-California) saying his colleagues will follow quickly.
The investment credit is part of a $76 billion plan to promote the development of the semiconductor industry in the United States.
Democrats say the pandemic has illustrated the dangers of relying on foreign suppliers when semiconductor shortages have rumbled across a long list of industries. Lawmakers on both sides are particularly concerned that the United States is relying on chips produced by a giant foundry in Taiwan, wondering what would happen if there were an armed conflict between the island nation and the China.
“When the vast majority of chips are produced at a few overseas sites, there is a great risk that the United States will not be able to get its hands on the chips needed to keep the American people safe in a conflict,” said the Senate. Chairman of the Finance Committee Ron Wyden (Golden.).
“Producing more chips here at home means our economy will be more resilient in the days ahead and our country will be safer and more secure.”
The industry also benefits politically from having facilities in states represented by key tax writers.
It’s a big employer in Wyden’s home state, where Intel, Analog Devices, Qorvo, On Semiconductor and Microchip Technology, among others, have facilities. Likewise, the ranking Republican on the tax panel, the senator. Mike Crapo of Idaho, counts Boise-based semiconductor giant Micron among its voters.
The ease with which lawmakers move the break stands in contrast to Democrats’ struggles with their reconciliation plans, though the semiconductor plan violates many of the conditions Manchin had set for that legislation.
For one, the semiconductor break is temporary and lasts four years — something that had been verboten with Manchin when it came to extending the Child Tax Credit.
And while Manchin had demanded that the reconciliation be paid in full, and then some, lawmakers are adding the cost of the semiconductor plan to the deficit.
The difference here is that, with so many lawmakers backing the package, Manchin’s vote is expendable and the West Virginia Democrat has little leverage to make demands of his colleagues. (A spokesperson for Manchin did not respond to a request for comment.)
While the tax relief has bipartisan support, it also has bipartisan opposition, with lawmakers on each end of the political spectrum lambasting the proposal.
“Massive corporate welfare,” said Senate Budget Committee Chairman Bernie Sanders (I-Vt.).
“There is no doubt that there is a global shortage of microchips and semiconductors, making it harder for manufacturers to produce the cars, cellphones and electronic equipment we need,” he said. -he declares.
“But the question we should be asking is: should American taxpayers provide the microchip industry with a blank check for more than $76 billion at a time when semiconductor companies are making dozens billions of dollars in profits and pay their leaders exorbitant salaries? I think the answer to this question should be a resounding ‘No’.
And while it’s a tax cut, Republicans like Rep. Kevin Brady of Texas, his party’s spokesperson on the Ways and Means Committee, is also unhappy with the credit.
The government should not be responsible for choosing which industries to subsidize, he said. And Brady complains that the plan provides outsized benefits for projects that are already in development.
“It would provide significant subsidies to a limited group of companies, which I think creates an unwarranted windfall for companies with projects already underway,” he said.
Brady predicted the pause won’t be temporary, noting that Congress has a long history of renewing tax benefits before they expire.
“As we know, there are some temporary tax credits [already in the code] — they tend to extend into eternity.