How shall we pay for an infrastructure plan? If not a gasoline tax increase, user fees on electric vehicles, or corporate tax hikes… then what? GOP Sen. Rob Portman said yesterday that bipartisan negotiators have some “creative” solutions to pay for core infrastructure, but mentioned only indexing the gas tax to inflation, an idea that has been rejected out of hand by many Democrats. He insisted that Democrats now need to find other pay-fors that don’t raise taxes. President Biden may respond as soon as today to the recent $1 trillion plan proposed by a group of bipartisan senators, though that idea includes no specific funding.
The debt ceiling fight looms large. Come July 31, the federal government will no longer be able to borrow and Treasury will need to take its usual “extraordinary measures” to keep the government solvent… but for how long? At least 10 GOP senators must support a debt limit increase but Republican leadership is talking tough. Sen. John Thune predicts that level of support is unlikely, while Sen. Roy Blunt says a debt ceiling increase may need to be contingent on spending reforms.
Will a tax credit correct the pandemic-driven semiconductor chip shortage? A bipartisan group of senators proposes a 25 percent tax credit for investments in semiconductor manufacturing. Senate Finance Committee Chair Ron Wyden and the panel’s top Republican Sen. Mike Crapo, with senators Mark Warner, Debbie Stabenow, John Cornyn, and Steve Daines, say the plan would provide “reasonable, targeted incentives” for domestic semiconductor manufacturing. A cost estimate for the proposal is not yet available.
Ireland seeks a compromise on the minimum global corporate tax. Ireland’s corporate tax rate is 12.5 percent, but the Group of 7 finance ministers agreed this month on a global minimum of 15 percent. Irish Finance Minister Paschal Donohoe told CNBC that “it is difficult for me to say what that compromise could yet look like. But I do believe it is in the interest of everybody to find a compromise.” He says the agreement must “recognize the role of legitimate tax competition for smaller and medium-sized economies.”
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