Discussion of President Biden’s $ 3.5 trillion plan resumed this week after the Ways and Means Committee discussed the proposed changes September 13-15. with Toyota, Honda and Tesla on changes to electric vehicle subsidies. The budget continues to face strong resistance from Republicans as well as leading budget conservative Democrats.
Originally included in the President’s infrastructure bill, the $ 3.5 billion budget bill still includes increased taxes on the highest paying individuals and businesses and funding for things like clean energy. , housing and the expansion of Medicare, with some changes. In particular, the version discussed in committee would increase the corporate tax rate from 21% to 26.5%, lower than the previous proposals, which would have set the corporate tax rate at 28%.
The National Association of Manufacturers has criticized the proposal because it has the idea of a corporate tax rate of 28%. A senior vice president of NAM, Aric Newhouse, said in a statement that “there is no denying that increasing the corporate tax rate would reduce the new jobs created.
Newhouse cited a NAM survey that found 91% of respondents in manufacturing would have a harder time raising wages with higher taxes and said the 2017 tax code resulted in historic job growth. in the manufacturing sector. “Going back to archaic tax policies” would have the opposite effect, Newhouse said.
Additional subsidies for electric vehicles built by the Union?
While the measure’s increase in the corporate tax rate has been the subject of persistent criticism from business groups, the latest round of changes has introduced a new point of contention for U.S. automakers: increased subsidies for electric vehicles built in the United States by unionized workers.
According to the UAW, purchases of electronic vehicles are currently subsidized by a tax credit of $ 7,500 for the first 200,000 electric vehicles sold by an automobile manufacturer. General Motors and Tesla have already passed the 200,000 vehicle threshold.
A proposed budget provision, presented by Representative Dan Kildee, a Democrat from Flint, Michigan, would remove that threshold and add an additional tax credit of $ 4,500 for electric cars built by unionized employees and an additional $ 500 for US-made batteries, for a total tax credit of $ 12,500 for an EV built by a US union that uses US batteries.
Honda, Toyota and Tesla have all complained that the extra money for union-built cars discriminates against their operations.
Honda, in a Sept. 12 statement, said the proposed expansion was “unfair” and discriminatory against non-union American auto workers. “If Congress is serious about tackling the climate crisis, as well as its goal of seeing these vehicles built in America, it should treat all electric vehicles made by American auto workers fairly and equally,” he said. -he declares. In a letter to Congress reported by the Associated Press, Toyota Motors said the union tax credit was not only “biased” but “exorbitant”.
Tesla CEO Elon Musk wrote on social media that the proposal appeared to have been “written by Ford / UAW lobbyists as they build their electric car in Mexico.” While Ford’s electric Mach-E Mustang is currently under construction in Mexico, these vehicles will not qualify for the tax credit, and Ford says future Mach-E’s will soon be built in Michigan.
United Auto Workers chairman Ray Curry praised the provision and Kildee for bringing it forward. “I commend Representative Kildee for developing legislation to protect and create more well-paying union jobs for years to come,” said Curry. The UAW has previously expressed concern over the rise of electrified vehicles, which contain fewer parts than conventional vehicles and require fewer workers for assembly.
Budget uncertain way forward
Democrats are walking the edge of a knife to pass the budget. In the face of unanimous opposition from Republicans, the bill’s only hope for survival is unanimous support from Democrats, which it currently lacks.
Key West Virginia Democratic Senator Joe Manchin said last weekend that he “cannot support $ 3.5 trillion.” Manchin prefers a budget closer to $ 1.5 trillion or $ 1.5 trillion, he said, and he opposes any corporate tax rate above 25%, which is 1.5% less than what ask for the current proposals. Arizona Democratic Senator Kyrsten Sinema also rejected the cost of the budget.
Democrats aiming to pass the bill using the budget reconciliation bill need all 50 Senate Democrats, including Manchin and Sinema, to vote in favor of the bill to pass it without any Republican support.