In a glimmer of hope for American businesses, President Joe Biden’s administration appears to be steering away from hardline Democrats who want to impose the highest corporate income tax in the industrial world — 28 percent. 

Now, White House officials said that Biden is willing to bend on his tax proposal to gain GOP support for a substantial infrastructure bill.

“He is personally leaning in, willing to compromise, spending time with senators — Democrat and Republican — to find out what is the art of the possible,” Commerce Secretary Gina Raimondo . “The only thing he won’t accept is inaction. It has to be big and bold, $1 trillion or more.”

Bipartisan groups in both houses also indicated Wednesday that they are working to find alternatives to tax increases to pay for the package. 

That doesn’t mean the threat of a harmful tax increase is going away anytime soon, said Erik Paulsen, a former U.S. congressman who now is a consultant with political consulting firm , which is headquartered in Washington, D.C. and has in Arizona.  

“It’s good that the new administration is floating new ideas as alternatives rather than just a straight increase to 28 percent, which is what many Democrats in the House and Senate would still like to see,â€� said Paulsen, a former leading member of the chief tax writing House Ways and Means Committee. “It’s important to really view these proposals with a lot of caution because the devil is in the details. There’s lots of fine print.â€�

Compromise possible?  

Biden is backing off of his original request for $2.2 trillion for the infrastructure package, which would be financed by relying heavily on tax increases on corporations and the wealthy. The current corporate income tax rate is 21 percent.

With little support from the GOP, Biden is now calling for at least $1 trillion for the package.

“If anything, it’s pretty safe to assume that Democrats want a rate increase,� Paulsen said. “And they want it badly. Some say 28 percent. Some are saying 25 percent is an acceptable level.�

Congress needs to act with care in considering changes to the current tax code, which came out of the Tax Cuts and Jobs Act of 2017 and has fueled jobs, innovation and tax revenues in Arizona, he said. 

“There is the potential that you would be giving up some very real economic incentives that are in the tax code right now and those could go away. These are incentives like research and development or clean energy for instance.�

Bipartisan groups in both houses seeking to avoid tax hikes 

After negotiations with Republicans failed this week, in both houses are working to find consensus on an infrastructure package.    

On Wednesday, a member of the Senate group, which includes Arizona Sen. Kyrsten Sinema (D), told that it is taking tax hikes off the table as they try to reach consensus on how to pay for the plan after White House negotiations with GOP leaders failed. 

“That’s my understanding. I think there’s ways to do that; hopefully it won’t be smoke and mirrors. Bottom line, this is probably the hardest part from my perspective, is how you get it paid for,” Sen. Jon Tester, D-Mont., said.

The group is expected to produce a $900-billion plan. 

Meanwhile, in the House on Wednesday, the bipartisan released a $1.25 trillion infrastructure plan. It also indicated it is avoiding tax increases right now as they enter into discussions about how to pay for it. Among the proposals being set forth are increased tax enforcement, reducing inheritance tax breaks for the wealthy, and using unspent Covid-19 relief funds. 

Increase would punish more than 1 million small businesses

Pro-business groups, trade associations and chambers of commerce including the Arizona Â鶹´«Ã½Ó³»­ of Commerce & Industry are calling on Capitol Hill to tread lightly when it comes to raising taxes on companies right now, particularly small businesses.

About 1.4 million small businesses that are organized as C-Corporations will pay the higher rate, according to an by Curtis Dubay, senior economist for the U.S Â鶹´«Ã½Ó³»­, the world’s largest business organization. 

“There is a false assumption that only big businesses will pay a higher rate. In fact, over a million small businesses— ‘Mom-and-Pop’ retailers, small manufacturers, and professional services firms that often suffered the worst during the pandemic—would also see their tax bills increase significantly,â€� Dubay said. 

These small businesses employ almost 13 million American workers across various sectors. Most are small businesses and many are very small: over 84 percent have fewer than 20 employees. 

“Hardest hit would be the sort of skilled jobs that politicians love to praise, but often in practice, do too little to support,â€� Dubay said. 

They include manufacturing small business C-Corps which employ the most workers, about 1.8 million; professional, scientific, and technical services are next with 1.3 million employees, followed by retail with about 1.2 million workers. 

Report shows more than half of small businesses need time to recover 

Many of these small businesses are just now beginning to return to normalcy, surveys show. According to the latest , 59 percent of small businesses believe it will take more than six months to return to normal.

That should be reason enough to hold off on a punishing tax hike right now, Paulsen said. 

“We’re coming out of a significant economic crisis coming out of the pandemic and we don’t want to see that stall out —and it is stalling out right now. Unfortunately, despite the rebound, it’s not coming back out as robustly as it should be.�

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The nation’s largest business advocacy group, the U.S. Â鶹´«Ã½Ó³»­ of Commerce, launched a new virtual dialogue series this week designed to bring national lawmakers from both sides of the aisle together on issues of importance to the business community and economic recovery. 

The goal is not only to discuss topics but to identify opportunities for consensus, examine and explain legitimate policy differences, and pursue pathways to compromise and meaningful solutions, said Neil Bradley, the chamber’s executive vice president and chief policy officer, who moderated the first event Tuesday. 

“We will spotlight elected officials who demonstrate the courage to work across the aisle to get things done and, in doing so, show that civility, consensus, and bipartisan cooperation still exist in Washington,� Bradley said.

Leading Democrat and Republican talk infrastructure 

The Â鶹´«Ã½Ó³»­ kicked off the new series, , with a visit from a leading Democrat and a leading Republican on the House Committee on Transportation and Infrastructure. They talked about what’s ahead for infrastructure, a top priority for the business community.

Featured speakers, Rep. Seth Moulton (D-MA) and Rep. Rodney Davis (R-IL), spoke about their commitment as colleagues and friends who are working together to push forward a bipartisan package to update the nation’s highways, bridges, water facilities, transportation systems, and other infrastructure. 

Gas tax outdated 

Efforts to pass a comprehensive infrastructure package have consistently failed over the past few years due to partisan gridlock. Attempts to raise the gas tax to fund projects through the Highway Trust Fund also fail year after year. Meanwhile, the tax is becoming insufficient as a funding source for highways as electric vehicles are moving to the forefront of society, they said.

Davis said other means for funding could include public-private partnerships. Moulton said that age-old subsidy programs could be revamped to find more efficient uses.

Extreme partisanship biggest threat to progress 

Both voiced optimism about moving forward meaningful legislation.

Rep. Davis, who has served in Congress since 2013, said it will require building consensus with members who aren’t focused on division. In recent years, infrastructure bills with large bipartisan support have failed because of a growing contingent of extremists in political office, he said.   

“You have to have a willingness to get to know your colleagues on the other side of the aisle. It’s a lot more difficult when many members are elected just from the far right and the far left,â€� said Davis, who ran on a platform of bipartisanship. 

“We all have to represent our different districts. But good policy looks for a win for everyone,� he said.

Davis said he focuses on finding lawmakers like Moulton he can work with, not against. 

“Ultimately that’s better for the American people. I think people have had enough of Congress just convening to bicker. They actually want Congress to get things done,â€� Davis said.  

Davis and Mouton both are pushing forward measures to do just that, they said.

Upgrade infrastructure via public-private partnerships 

Davis recently introduced a bipartisan bill with Rep. Earl Blumenauer (D-OR) to help pay for a modernization of the nation’s transportation infrastructure, which faces a funding gap of more than $1.1 trillion by 2025, according to the American Society of Civil Engineers.

The bill, the Building United States Infrastructure and Leveraging Development Act (BUILD Act), would double the national limitation amount for qualified highway or surface freight transfer facility bonds from $15 billion to $30 billion for road, rail, bridge, and freight improvements through  public-private investment partnerships.

High speed rail plan for global competitiveness 

Rep. Moulton has introduced a package that would emphasize high speed rail to improve America’s global competitiveness. 

“We’ve got to make sure we have a forward thinking infrastructure that will build for the next century,� said Moulton, who has served in Congress since 2014. “When we’ve done that in the past, it’s benefited everyone in America.�

Moulton introduced legislation that calls for investing $205 billion over five years for high speed rail. The American High-Speed Rail Act would create at least 2.6 million direct American jobs, increase connectivity and inclusivity in communities, and modernize the transportation system, which lags behind many other developed nations, he said

Modern infrastructure creates equity 

Both representatives said modern infrastructure brings more than new roads and bridges. Davis said it can improve communities that have “problems with equity.� Moulton said high speed rail can increase connectivity and inclusivity.

“When you have high speed rail it connects communities that are kind of left out right now,� Moulton said. “New transportation technologies bring out communities together and make us more inclusive.�

U.S. Â鶹´«Ã½Ó³»­ push for bipartisanship The Common Grounds series builds on the , which recognizes members of Congress who demonstrate bipartisan leadership and constructive governing. In many cases, Common Grounds events will be hosted in partnership with local and state chambers of commerce across the country. The event series was first announced during the U.S. Â鶹´«Ã½Ó³»­’s signature annual event, .

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