Democratic Senator Sherrod Brown is strongly in favor of rolling back the Trump tax cuts for corporations — despite warnings from the business community that it could disrupt the economic recovery.
“It was a giveaway to corporate interests and the richest people in the country,” Brown, the chairman of the Senate Banking Committee, told CNN Business on Thursday. “Of course we should scale some of that back.”
The comments hint at the brewing fight between business leaders and Democrats over a fair corporate tax rate and how to pay for ambitious programs such as infrastructure spending.
Brown, speaking hours after President Joe Biden signed the $1.9 trillion American Rescue Plan into law, voiced support for raising revenue by lifting the corporate tax rate, which Congress cut in 2017 from 35% to 21%.
During the 2020 presidential campaign, Biden proposed raising the corporate tax rate to 28% and administration officials have indicated they will look at increasing that rate as a way to help pay for a massive infrastructure package.
“Taking away some of the tax breaks corporate interests got will only help the economy, it won’t hurt it,” Brown said. “It will increase the ‘whine quotient’ from corporate leaders, but they always whine and always want tax cuts. Their $3 million, $4 million and $10 million compensation is never enough.”
Business groups vow to fight tax hikes
The remarks underscore the sea change in leadership at the powerful Senate Banking Committee, which until January was led by pro-business Republican Mike Crapo.
Brown, a Democrat from Ohio, argued that the affluent reaped most of the benefits of the 2017 tax overhaul.
“Look at the contrast between what we did this week. We cut taxes on the lowest income people,” he said. “It’s clear that corporations got an even bigger tax break from their billionaire president than they even asked for.”
Business groups are vowing to fight any efforts to unwind the Trump tax cuts.
The Business Roundtable, a powerful alliance of CEOs, warned this week that raising the corporate tax rate would make US businesses uncompetitive on the world stage just as the economic recovery gathers momentum.
“The Roundtable will be actively opposing efforts to raise corporate taxes,” Josh Bolten, the group’s CEO, said Wednesday during a press briefing.
Bolten argued that the Trump tax cuts set the stage for a strong stock market, historically low unemployment and strong business investment.
But for many Americans, the Trump tax law failed to deliver, with many companies sharing the windfall with shareholders via large stock buybacks instead of increasing wages or hiring more workers.
Brown expresses support for $800 billion trading tax
Meanwhile, a debate has reignited over the wisdom of imposing a financial transaction tax that could help ease Washington’s monstrous budget deficits.
A 0.1% tax on stock, bond and derivative transactions could raise $777 billion for the federal government over a decade, according to a 2018 estimate by the nonpartisan Congressional Budget Office. (That estimate assumes trading volumes wouldn’t shrink after the tax was imposed.)
This idea, long a goal of progressives, gained momentum earlier this year after the GameStop (GME) trading frenzy raised concerns about the health of financial markets.
Brown, whose committee held a hearing on the GameStop controversy earlier this week, expressed support for a financial transaction tax as a way to curb predatory trading practices.
“That’s one of the things we can do that makes the system fairer,” Brown told CNN Business.
‘Wall Street recklessness’
The White House previously said a financial transaction tax on trading deserves additional study — particularly in the wake of the GameStop frenzy — and could be part of a greater evaluation of how such a tax might boost both government revenue and market stability.
However, the financial industry argues that even a 0.1% tax on transactions will hurt retail investors and make it harder to buy and sell securities by sapping liquidity.
“This approach has a long history of unintended consequences that will penalize workers, pensioners and American families,” a spokesperson for the Coalition to Prevent the Taxing of Retirement Savings told CNN Business last month.
That coalition includes the New York Stock Exchange and UBS (UBS), as well Citadel Securities and Virtu Financial (VIRT), two high-frequency trading firms that could be hit particularly hard by a financial transaction tax.
Brown also expressed a desire to rein in high-speed trading.
“High frequency trading is Wall Street recklessness at its worst,” he said. “It poses a real threat to workers and the economy. Adding [a transaction tax] ensures that Wall Street pays its fair share and probably behaves better.”