Biden Mulls Funding Infrastructure Plan With Tax Increases, Corporate Tax-Cut Rollbacks, New Fees

March 9, 2021 Updated: March 10, 2021

President Joe Biden is considering tax increases, new fees, and a corporate tax rollback to pay for an infrastructure plan that’s now taking shape, according to White House press secretary Jen Psaki and a California Democrat familiar with the discussions on the matter.

Biden floated a $2 trillion infrastructure bill while campaigning, although his administration has so far declined to specify a price tag. In remarks to “Axios on HBO” on March 8, Sen. Joe Manchin (D-W.Va.) suggested the package could cost as much as $4 trillion, adding that he would oppose taking on more debt to fund such a proposal but would instead insist on tax hikes.

Manchin told the outlet that he supports a range of tax increases, including repealing “a lot of” President Donald Trump’s tax cuts and raising the corporate tax rate to “at least” 25 percent from the current 21 percent.

At a March 8 press briefing at the White House, Psaki was asked about Manchin’s insistence that “any big infrastructure package should be paid for” rather than taking on more debt, whether Biden supports this view, and if he sees corporate tax increases as one way to do that.

Psaki responded by saying that Biden generally supports increases in taxes but “we don’t have a bill or a package yet, so we can have that conversation once we get there.”

“One of the items that he spoke about in his Build Back Better agenda was making sure that people paid their fair share—whether it’s highest income or rolling back some of the corporate tax cuts,” Psaki said. “So, certainly, those are policies that he supports.”

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White House press secretary Jen Psaki speaks at the White House on March 4, 2021. (Samuel Corum/Getty Images)

Rep. John Garamendi (D-Calif.) confirmed that Biden is considering boosting taxes as a way to pay for the infrastructure plan. Garamendi attended a March 4 meeting at the White House, where the president and a number of bipartisan lawmakers discussed the bill.

He told the Sacramento Bee that the ideas considered at the meeting included raising the excise tax on fuel, which he said “hasn’t been raised in 20 years;” some form of a user fee for electric vehicles on highways since their owners aren’t subject to fuel taxes; and a carbon tax.

He did not provide more specifics on the proposed taxes, nor on the overall cost of the package.

“No price tag right now, because we’re going at this from the bottom up,” Garamendi told the outlet. “We’ll say, ‘what’s the cost of broadband, what’s the cost of repairing bridges?’ and go from there.”

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Rep. John Garamendi (D-Calif.) (R) joins House Democrats to announce their “Make It In America” agenda at the Capitol in Washington on May 4, 2011. (Chip Somodevilla/Getty Images)

In an interview with the news outlet Cheddar on March 8, Garamendi said the idea of a carbon tax was met with a favorable response from one of the Republicans at the March 4 meeting, fueling his optimism that the legislation could be shaped in bipartisan fashion.

“We’re talking about funding mechanisms. One of them, in a direct way that would reduce emissions, that’s the carbon tax, to be used fully for infrastructure—well, maybe,” he said.

“Or maybe partly refunded. There’s another issue out there, 100 percent refundable carbon tax on transportation fuels. Now we’ve got things we can talk about, so let’s get on with it,” he added.

At a White House press briefing the day after Biden’s infrastructure meeting, Psaki didn’t provide more specifics on the discussions, but said that rolling back tax cuts may be on the menu.

“I don’t have any more details. We don’t even have a package that is being proposed at this point, and when we get to that point I’m sure we’ll have this discussion,” Psaki said at a briefing on March 5. “Obviously, the President has talked in the past about different revenue raisers, whether it’s rolling back certain tax cuts, but we’re just not at that point in the internal policy discussions right now.”

In his interview on Axios, Manchin also said that he’ll block Biden’s infrastructure bill unless more effort is made to include Republican voices.

Asked about Manchin’s comments, Psaki suggested that the West Virginia senator will likely come through in the end.

“Senator Manchin and Senator Sanders and a range of Democrats in between just voted to support a $1.9 trillion package that is the most progressive piece of legislation in history,” she said. “So I would say we feel pretty good about that.”

She added that Biden is optimistic the infrastructure plan will win bipartisan backing.

“The president believes that there is a path forward on a range of issues where there’s been a history of bipartisan support, including infrastructure,” she said.

“Infrastructure improvements are not a Democratic issue, they’re not a moderate issue, a progressive issue, a conservative issue. The American people want their roads, rails, and bridges to be reformed. He feels there’s a path forward,” she said.

Psaki said that, at this point, “there’s no bill that’s being considered. He’s having discussions to hear ideas, hear good ideas from members of both parties. And once we have a bill, we’re happy to have the discussion on how we move it forward.”

Rep. Sam Graves (R-Mo.), the top Republican on the House Transportation and Infrastructure Committee and one of the participants in last week’s infrastructure meeting at the White House, said the plan must be bipartisan and that a funding mechanism is needed.

“It cannot be a ‘my way or the highway’ approach,” Graves said, referring to previous Democratic legislation. “A highway bill cannot grow into a multitrillion-dollar catch-all bill, or it will lose Republican support.”

During his presidential campaign, Biden pledged to invest $2 trillion in fixing highways, bridges, and airports; building climate-resilient homes; wiring cities for broadband internet; and encouraging the manufacturing of fuel-efficient cars and installing electric vehicle charging stations.

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