Behold it, but don’t count on Joe Manchin actually deploying it. The same day that Senate Democrats won a parliamentary ruling allowing them to bypass the filibuster on Joe Biden’s $2 trillion infrastructure bill, Manchin said not so fast. Even with reconciliation, Democrats need 50 votes, which means they can’t afford to lose Manchin.
And he claims to be loseable, if the package hikes the corporate tax rate up to 28%. More importantly, Manchin claims that he has several other Democratic votes in his pocket, giving him “leverage” to dictate changes to the bill:
Speaking on a West Virginia radio station, Manchin said he would vote against President Biden’s proposal to raise the corporate tax rate from 21 percent to 28 percent, instead saying the rate should be set at 25 percent. Even if all other Democrats support the plan, Manchin’s opposition would likely be enough to kill it because the Senate is split 50-50 between Democrats and Republicans.
President Donald Trump’s 2017 tax law lowered the rate from 35 percent to 21 percent. Manchin said that numerous other Senate Democrats supported his position and that the bill’s tax provisions would have to be changed to be approved. …
“The bill, basically, is not going to end up that way,” Manchin said on Monday. “If I don’t vote to get on it, it’s not going anywhere. So we’re going to have some leverage here. And it’s more than just me. … There’s six or seven other Democrats that feel very strongly about this.”
Theoretically, Manchin could have this much leverage. Practically speaking, however, it’s unlikely to be sustainable. First off, Manchin has beaten the drum constantly for infrastructure spending, which is expected to give him lots of bacon to bring home to West Virginia — perhaps enough to make those deeply red-state voters forget he’s a Democrat. Manchin has argued for a much higher level of spending on infrastructure, perhaps as much as $4 trillion, so he’s very invested in getting this passed.
Is he legitimately concerned over the corporate tax hike? Probably, and for good reason. Yesterday, Janet Yellen tried to head off that debate by convincing the rest of the world to adopt the US corporate tax regime, thereby eliminating their ability to woo American capital. NPR called this a “bold idea,” but it’s farcical to believe that other nations will help the Biden administration to keep American capital captive:
It’s an idea that has been debated widely across global capitals: impose the same minimum corporate tax rate all over the world to prevent companies from shopping around for the country that can offer the smallest tax bill.
Now, it has a powerful new adherent. Treasury Secretary Janet Yellen on Monday expressed support for a minimum tax rate, providing the vital backing of the U.S. government.
Yellen, in a speech, said a minimum global tax rate would stop what she described as a “30-year race to the bottom” that has allowed big corporations to avoid contributing fully to vital national needs.
The support for a global tax rate is a new plank in the Biden administration’s tougher approach to corporate taxes.
The chances of this ever getting to global-treaty status is slim. The chances of a US Senate getting 67 votes to ratify such a treaty — essentially surrendering its sovereign ability to set tax rates to a multinational organization like the UN or WTO — is zero. And the chances of enforcing such an agreement even if one could reach it would be somewhere short of “hell freezes over,” but within sight of it.
With all this in mind, it’s tough to see Manchin sticking to his guns here, especially since reconciliation will require at least some static tax analysis showing a pay-for. How do you get to the numbers involved, even in this intermediate level of Manchin’s desired spending level, with just an incremental shift from 21% to 25%, as Manchin and his bloc suggest? That contradiction might play very heavily in just how “very strongly” Manchin and his bloc feel about limiting the corporate tax rate. They will feel much more strongly about unlocking all that pork. That’s the real leverage here, and the safe bet is that Manchin knows it already.
Update: I wrote “remember” when I meant “forget” in the paragraph after the first excerpt. Compose in haste, repent at leisure. I’ve fixed it now.