During a presentation in Pittsburgh yesterday, President Biden spoke on the first part of his vision for America and unveiled his American Jobs Plan (AJP or the plan), a $2.3 trillion infrastructure spending plan for the next decade.
Included in the AJP’s broad agenda are plans for the rebuilding of roads, bridges and water systems, expanding broadband internet access, funding research and development, improving housing and education facilities from pre-school through college, upgrading veterans hospitals and other federal buildings, along with funding additional programs. The AJP is the first of at least two large programs to be proposed by President Biden and his administration; a second is expected to be released later in April and is believed to target childcare and healthcare programs.
The funds to pay for the AJP are to be generated from proposed changes to corporate income tax provisions. These changes are projected to raise $2 trillion dollars over 15 years. The tax portion of the overall AJP is being called the Made in America Tax Plan.
A broad summary of both prongs of the initial proposal was released by the White House in a Fact Sheet
The Made in America Tax Plan proposes the following general provisions:
- Increase the corporate tax rate from 21% to 28%.
- Enact a corporate minimum tax rate of 15% based upon reported profits to investors.
- Reform and increase the Tax Cuts and Jobs Act tax assessed on Foreign Derived Intangible Income.
- Work with other countries to propose a worldwide minimum tax system to “end the race to the bottom” on global corporate tax rates.
- Strengthen provisions on profit-stripping strategies that shift profits to lower-tax-rate countries.
- Aim to prevent corporate inversions.
- Deny deductions related to offshoring jobs.
- Eliminate current tax preferences (subsidies, favorable deduction rules, and special foreign tax credits) for the fossil fuel industry.
- Restore Superfund Trust Fund assessments on industries generating pollution.
- Increase IRS enforcement on corporations.
The AJP, as laid out in the Fact Sheet, is essentially a broad policy declaration reflecting many of the president’s talking points made during his election campaign. Specific details and the final shape of this spending and tax reform plan will take months to work through and negotiate. Predictably, there are lawmakers who believe the package does not go far enough on spending, while others call the costs too high.
Further, the tax plan details released yesterday don’t include any proposed changes to individual income taxes; these are expected to be detailed with the release of the second spending plan.
We will continue to monitor and write about the ongoing policy changes involving tax reform, and its impact on businesses and individuals. Future articles in this series will be provided as additional ideas are presented by lawmakers, specific bills are proposed that may (or may not) ultimately become law, and as more details emerge.
