Wyden: Funding infrastructure with gas tax hike a ‘big mistake’

Senate Finance Committee Chairman Ron Wyden (D-Ore.) on Tuesday said in an interview with The Hill that he thinks it would be a “big mistake” to pay for an infrastructure package through a gas tax increase instead of through raising taxes on corporations.

“It just seems to be a big mistake to go there when corporate [tax] revenue is down something like 40 percent in the last few years,” Wyden said.

Wyden’s comments come as Congress and the White House are debating the size and scope of infrastructure legislation, as well as how to pay for such a measure. As chairman of the committee with jurisdiction over taxes, Wyden will play a key role in crafting the financing portion of an infrastructure package.

President Biden in late March released a $2.25 trillion proposal that would be financed in part by raising the corporate tax rate from 21 percent to 28 percent. But Biden’s proposed tax increases have drawn criticism from Republicans, who lowered the corporate rate from 35 percent to 21 percent in their 2017 tax-cut law, as well as from business groups. Republicans also want the amount of spending in an infrastructure bill to be smaller.

Some business groups, such as the U.S. Chamber of Commerce, have expressed interest in raising the federal gas tax. The Problem Solvers Caucus, a bipartisan group of centrist lawmakers, has also floated increasing the gas tax as a possible way to pay for an infrastructure bill.

But many key Democrats have been critical of raising the federal gas tax, which hasn’t been increased since the Clinton administration, because such a tax increase would impact middle-class households. Biden has pledged to not raise taxes on individuals and households making under $400,000 annually.

Wyden is one of a growing number of Democrats who have expressed concern about raising the gas tax. The Biden administration has criticized the idea, as have member of the Democratic caucus across the ideological spectrum, ranging from centrist Sen. Joe Manchin (D-W.Va.) to progressive Sen. Bernie Sanders (I-Vt.).

Wyden said he thinks it doesn’t make sense to increase taxes on the middle class when large companies use U.S. infrastructure and received significant tax cuts under the 2017 law.

“The biggest of the big megacorporations use the infrastructure, use the roads and bridges,” he said.

Wyden pointed to analyses that have found a decline in corporate tax revenue and effective corporate tax rates following enactment of the 2017 tax-cut law.

He cited research from his committee, analyzing Congressional Budget Office data, that found that corporate tax revenues as a share of gross domestic product declined by nearly 40 percent after the enactment of Republicans’ tax-cut law, compared to the average from 2000 to 2016. He also cited a report issued earlier this year by the Joint Committee on Taxation, Congress’s nonpartisan tax scorekeeper, that found that the average tax rate paid by U.S. multinational corporations fell by about 50 percent from 2017 to 2018, the first year when the GOP tax law was in effect.

The disagreements between Democrats and Republicans over how to pay for an infrastructure bill reduce the odds that a bipartisan bill will be enacted. But even if Democrats seek to pass an infrastructure bill without Republican support, they will face challenges in getting consensus on a package. For example, Manchin has said he doesn’t support raising the corporate tax rate to 28 percent and would prefer a 25 percent rate.

When asked if he could bridge the divide among Democratic lawmakers, Wyden pointed to the international tax framework he released last month with both centrist Sen. Mark Warner (D-Va.) and progressive Sen. Sherrod Brown (D-Ohio).

Wyden said that as Finance Committee chairman, he will be ready with “proposals to produce revenue the Senate Democratic Caucus believes is necessary” and that he hopes can get some Republican support as well.