(Reuters) -The White House told Democratic lawmakers on Wednesday that a proposed hike in U.S. corporate taxes is unlikely to make it into their signature social spending bill, according to a congressional source familiar with the discussions.
President Joe Biden’s plans to hike the corporate tax rate to 28% from 21%, a key campaign promise, are likely to be one of the steep concessions he makes to steer his economic revival package through Congress, the White House disclosed in the private meeting with top Democrats.
The White House declined to comment.
Biden, his aides and congressional leadership are racing to close a deal as soon as this week on a set of tax hikes they hope will fund more than $1.75 trillion over a decade in new programs ranging from childcare to eldercare, healthcare, affordable housing and climate change mitigation.
They have no margin for error because Democrats hold only narrow majorities in the House of Representatives and Senate. Republicans oppose the legislation.
“The president knows that he’s not going to get everything he wants in this package,” White House spokesperson Jen Psaki told reporters on Air Force One. “Nor will any member of Congress, probably, and that’s what compromise is all about.”
Biden, who framed the 2020 election against Republican then-President Donald Trump as one between working-class Scranton, Pennsylvania, and Manhattan’s Park Avenue, pitched the tax hike as an effort to make sure the wealthy and corporations pay their fair share. Trump and congressional Republicans cut corporate rates to 21% from 35% in 2017.
After taking office in January, Biden paired the tax hike with a mix of programs he has argued will put the United States on a more sustainable economic footing to compete with China, from universal pre-kindergarten to dental benefits for seniors and incentives to encourage a shift to low-carbon energy sources.
Business groups and Republicans have fought the measures, arguing they will hamper the economy’s recovery from the COVID-19 pandemic.
Top Democrats may now put on the table alternate financing proposals for the bill that have been discussed for weeks, including imposing new levies on stock buybacks and business partnerships, according to a person familiar with the matter.
The S&P 500 closed 0.4% higher after the news about the White House’s private comments was first reported by the Washington Post. After-hours trading in the U.S. stock index trended 0.3% higher.