It was a year ago this week when President Joe Biden hosted bipartisan infrastructure talks in the Oval Office, where two Republican senators — Utah’s Mitt Romney and North Dakota’s John Hoeven — said they simply wouldn’t tolerate any increases to corporate tax rates. It was a line the Democrat had heard before.
As we discussed soon after, that White House meeting came on the heels of Republican Sen. Shelly Moore Capito describing corporate tax rates as a “non-negotiable red line“ for her party. Which came on the heels of Republican Sen. Roger Wicker characterizing a corporate tax hike as a deal breaker for GOP senators. Which came on the heels of Republican Sen. Susan Collins literally laughing out loud at Biden’s tax plans.
We now know, of course, that negotiators worked out an alternative plan and Congress ended up approving a bipartisan infrastructure package, but the process was illuminating. Republicans insisted they were open to compromise, but they added that they simply wouldn’t consider touching tax breaks for corporations. They were off the table. Period. Full stop.
A year later, it seems a Democratic senator is saying something similar — though for a variety of reasons, her position is far more difficult to understand. The Arizona Republic reported:
U.S. Sen. Kyrsten Sinema vowed Tuesday to conduct herself in the same manner as she did during the “Build Back Better” negotiations of 2021 should Democrats try to revive the centerpiece of President Joe Biden’s legislative agenda. “What I can’t tell you is if negotiations will start again or what they’ll look like,” Sinema, D-Ariz., said at an Arizona Chamber of Commerce and Industry luncheon at the Arizona Biltmore resort in Phoenix. “But what I can promise you is that I’ll be the same person in negotiations if they start again that I was in negotiations last year.”
The newspaper’s report added that the Democratic senator “told the business group that she remains opposed to raising taxes on corporations.”
Sinema specifically said, “You all know, the entire country knows, that I’m opposed to raising the corporate minimum tax rate.” She also reiterated her opposition against “any tax policies that would put a brake on any type of economic growth or forestall business and personal growth for America’s industries.”
It’s possible that the senator is staking out a negotiating position, and then over the course of intra-party discussions, the Arizonan will show greater flexibility.
On the other hand, if Sinema is entirely sincere, and she will oppose any measure to ask corporations to pay so much as an extra penny in taxes, then the senator’s comments are highly consequential.
To understand why, let’s take a step back and revisit our earlier coverage. The most powerful tool congressional Democrats have in their pocket right now is one they don’t know how, when, or whether to use. It’s called the budget reconciliation process and it could allow the governing majority to pass an ambitious spending package without worrying about a Republican filibuster.
The trouble is, Democrats have spent the better part of a year trying to figure out what to do with this special opportunity. While Senate rules dictate that their reconciliation bill focus on taxes and spending, that leaves the door wide open for the party to tackle everything from climate to health care to education, or some combination of this and other domestic priorities.
The original plan was Biden’s ambitious Build Back Better agenda, which has since been rejected by West Virginia Sen. Joe Manchin. That said, in recent weeks, Manchin has signaled a willingness to at least have a conversation about an alternative, slimmed-down package. In fact, the conservative Democrat is fully on board with paying for the prospective legislation by rolling back some of the corporate tax breaks Republicans approved five years ago.
But in order to pass such a plan, the 50-member Senate Democratic conference would have to be unanimous — which is why Sinema’s comments were so notable. GOP leaders expect the Democratic senator to help derail her own party’s domestic package, and the more the Arizonan protects corporate tax breaks, the more likely it is that she’ll prove Republicans right.
What’s odd about this is … well, pretty much everything. Consider:
- Sinema voted against the corporate tax breaks she now seems eager to protect.
- The corporate tax breaks didn’t work and failed to deliver the economic benefits Republicans promised.
- Many corporate giants are currently paying no federal income taxes, while others pay far less than the current rate of 21 percent, which should encourage Congress to help ensure that businesses pay their fair share.
- Raising corporate tax rates is popular. Even Amazon.com CEO Jeff Bezos last year endorsed increasing the corporate tax rate.
- If Sinema faces a primary rival in two years, her willingness to fight for corporate tax breaks she previously opposed might very well put her career in jeopardy.
And yet, as the senator told a business advocacy group promised that her position from last year — when she told colleagues she wouldn’t accept any corporate tax rate increases — won’t change.
If Sinema sticks to this position, the Democratic efforts to pass a meaningful domestic package this election year will probably fail.