Tax disagreements plague compromise on infrastructure bill

By Casey Harper | The Center Square

U.S. Senate Republicans are expected to release a proposal for a pared back infrastructure bill this week, but disagreements over increased taxes and Internal Revenue Service enforcement may be a poison pill for the negotiations.

Minority Leader Mitch McConnell, R-Ky., is expected to send a new $1 trillion infrastructure proposal to Democrats, the latest step in a series of tough negotiations between the two parties.

The roughly $1 trillion plan is nearly double Republicans’ previous proposal of $568 billion from April but is still significantly less expensive than President Joe Biden’s $2 trillion “American Jobs Plan,” introduced in late March.

Besides the total spending amount, the biggest area of disagreement comes on how to pay for it.

Despite the Republicans’ new elevated package, both parties remain far apart on Biden’s proposed tax increases, particularly his call to raise the corporate tax rate from 21% to 28%.

“President Biden’s plan to raise taxes would hit Americans at all income levels and slow the economy down to a crawl,” McConnell said. “It won’t earn a single Republican vote. We’re going to fight it the whole way.”

Biden has also proposed heavily increasing IRS audits, claiming he can use the more aggressive approach to raise $800 billion, especially by auditing corporations.

“This will be paired with a broader enforcement initiative to be announced in the coming weeks that will address tax evasion among corporations and high-income Americans,” the White House said in a statement.

While corporate tax rates have been the main sticking point in negotiations, a bill released by Senate Republicans this week suggests they may be preparing a tougher stance against increased enforcement.

Senate Republicans introduced the “Don’t Weaponize the IRS” bill Monday. Alluding to the IRS scandal a decade ago where it was discovered that the federal tax collecting agency targeted conservative groups, the Republican lawmakers made clear their wariness of increased IRS enforcement and laid the groundwork for opposition to Biden’s plans to beef up audits.

The bill itself responds to provisions in H.R. 1 that requires the names and addresses of nonprofit donors to be disclosed, information Republicans argue could be used by the IRS to identify and target conservatives once again.

“Government targeting individuals for their political beliefs is about as un-American as you can get, yet that’s exactly what the IRS did during the Obama-Biden administration,” said Sen. Shelley Moore Capito, R-W.Va, who is also leading this effort. “Now, Democrats are attempting to repeal the First Amendment protections President’s Trump put into place through their egregious elections power grab.”

“Removing the requirement to report the names and addresses of donors helps protect taxpayers’ First Amendment rights: such information is not needed for tax administration purposes,” Capito’s office added.

Republicans have been critical of additional components of Biden’s plan, including hundreds of billions of dollars for supporting home health care or job training, which they argue should not be considered as part of an infrastructure package.

“Republicans have responded to Democrats’ ‘infrastructure’ bill with a smart proposal to meet real needs,” McConnell said amid talks last week. “Roads. Bridges. Ports. Airports. Waterways. Broadband. Are Democrats ready to work together? Or was ‘infrastructure’ just wrapping paper for more gifts to the far left?”

Biden has pushed back though, saying the modern idea of infrastructure is more broad.

“The idea of infrastructure has always evolved to meet the aspirations of the American people and their needs, and it’s evolving again today,” Biden said in a speech defending his plan. “To automatically say that the only thing that’s infrastructure is a highway, a bridge or whatever, that’s just not rational. It really isn’t.”