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March 31, 2021
2021-9005

BREAKING TAX NEWS | Biden administration calls for infrastructure plan with tax increases

The White House on March 31 outlined the $2 trillion American Jobs Plan that President Biden will unveil later today in Pittsburgh, calling for investments in roads and bridges, broadband, and R&D financed with tax increases that, for the most part, were outlined during the Presidential campaign. These include raising the corporate tax rate from 21% to 28% and making major changes to the TCJA's international tax provisions. The second part of the Build Back Better plan, focused on social spending like health care, childcare, and education, is expected to be detailed in the coming weeks, and will include additional tax proposals, White House Press Secretary Jen Psaki said on MSNBC this morning.

The American Jobs Plan calls for a renewed electric grid, and high-speed broadband for all; creating jobs and raising wages and benefits for essential home care workers; and revitalizing manufacturing, securing US supply chains, investing in R&D, and providing training for "the jobs of the future." The latter category calls for $50 billion in semiconductor manufacturing and research, as called for in the bipartisan CHIPS Act. The plan also calls for a $174 billion investment in electric vehicles.

Details on the proposed tax increases will likely be included in the President's FY 2022 budget plan. According to a fact sheet released this morning, however, the Made in America Tax Plan proposed alongside the American Jobs Plan:

  • Increases the corporate tax rate to 28%
  • Increases the rate on global intangible low-taxed income (GILTI) to 21%, calculates it on a country-by-country basis and eliminates the 10% return on tangible assets
  • Encourages other countries to adopt strong minimum taxes on corporations
  • "[D]enies deductions to foreign corporations on payments that could allow them to strip profits out of the United States if they are based in a country that does not adopt a strong minimum tax"
  • "[F]urther replaces an ineffective provision in the 2017 tax law that tried to stop foreign corporations from stripping profits out of the United States"
  • Makes it "harder for U.S. corporations to invert"
  • Denies companies expense deductions for offshoring jobs and provides a credit for expenses for onshoring
  • Eliminates the deduction for foreign-derived intangible income
  • Imposes a 15% minimum tax on corporations based on "book income"
  • Eliminates tax preferences for fossil fuels
  • Strengthens business tax enforcement

"If passed alongside President Biden's Made in America corporate tax plan, it will be fully paid for within the next 15 years and reduce deficits in the years after," the fact sheet states.

 
 

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