Rep. Kevin Brady (R-Texas) said that while Democrats’ new infrastructure package contains funding for some core improvements, the social policies and corporate tax increases in it will undo any benefits the legislation will have for the economy.
“Infrastructure investment, smart ones, can help grow the economy over time. My point is the tax increases negate all of that,” Brady said on Tuesday during an early morning interview with CNBC’s “Squawk Box.”
Brady said less than half the infrastructure package addresses core needs like roads, bridges, ports, airports, broadband, water, and sewers, which both Democrats and Republicans want to fund.
“It’s when you go into all the social spending. And my point is, just as the recent COVID bill had very little to do with COVID, this infrastructure bill has way too little to do with real infrastructure. That’s where we ought to start and try to find some common ground,” said the ranking member of the House Ways and Means Committee.
Brady criticized President Joe Biden’s current plan to increase taxes on U.S. companies, praising former President Donald Trump’s tax cuts, which he said stimulated the economy.
“2019 is a great example. Two years after we did the tax reforms and tax cuts, we saw the largest jump in household income in almost half a century,” he said. “In fact, it was larger in one year than all eight years of the Obama, Biden administration. We saw the lowest poverty rate in half a century as well.”
In contrast, Brady said that history has shown that Biden’s proposed $2 trillion tax increase, during a pandemic, would create a downturn in the economy and spur companies to invest overseas to avoid the increased taxes.
“No president has ever raised business taxes to rebuild an economy and then to drive our rates worse than China’s and on par with Syria’s. The end of the day we’re going see slower hiring, we’re going see less investment in the U.S., and I would predict we will see the second wave of U.S. companies inverting or moving their headquarters overseas in the long run. That’s why I think this is such a major mistake,” said Brady.
The tax increases will “make it better to be a foreign company operating in America than an American company, so they are going so far in the wrong direction,” Brady added.
Biden said on April 5 that the proposed increase in the corporate tax rate won’t drive companies out of the United States, as he vowed not to negotiate with Republicans over the higher rate.
Speaking to reporters after arriving on The Ellipse in Washington, Biden said there’s no evidence that increasing the rate to 28 percent will harm the economy or spur companies to look abroad.
“The tax was 36 percent, and it’s now down to 21 percent. The idea that that—it’s bizarre, we’re talking about a 28 percent tax that everybody thought was just fair enough for everybody,” he said.
“Here you have 51 or 52 corporations in the Fortune 500 that haven’t paid a single penny in taxes for three years? Come on, man. Let’s get real.”
Biden’s $2 trillion infrastructure plan includes raising the corporate tax rate from 21 percent, where it has been since Trump’s 2017 tax cut slashed the rate from 35 percent.
Biden also wants to impose a 15 percent minimum tax on large companies. The tax increases would fully pay for the infrastructure plan in 15 years, the White House claims.
Sarah Bianchi, head of U.S. public policy at Evercore ISI and former economic aide to Biden, said that Biden’s tax proposal tries to address the inequalities in the system.
“His whole outlook has always been that Americans believe tax policy needs to be fair, and he has viewed all of his policy options through that lens,” said Bianchi. “That is why the focus is on addressing the unequal treatment between work and wealth.”
Republicans largely oppose the proposal.
Zachary Stieber contributed to this report.