President Biden Unveils Details of $2.5 TRILLION Corporate Tax Hike to Pay For Infrastructure
Washington D.C. – One week after rolling out his $2+ trillion infrastructure plan, President Biden today unveiled more specifics about how he intends to pay for it.
In a 19-page report released by the U.S. Treasury Department and dubbed the “Made in America Tax Plan,” the Biden Administration said its eight-year infrastructure spending plan will be fully paid for — over 15 years — through a combination of corporate tax increases, closing numerous tax loopholes, ramping up enforcement on “tax avoidance,” and ending subsidies for fossil fuel producers and replacing them with “incentives for clean energy production.”
“The President’s plan would make the tax code more efficient, reverse biases against labor, raise sufficient revenue to pay for critical initiatives, eliminate incentives for profit shifting and offshoring, and introduce new preferences for the production of clean energy,” the report stated.
The Treasury Dept. indicated the tax reforms would generate $2.5 trillion in revenue over 15 years.
Corporate Income Tax Reform
As part of the Made in America Tax Plan, the Trump tax cuts (which lowered the corporate income tax rate from 35% to 21%) will be increased to 28%.
The report stated that in addition to “raising revenue to fund urgent fiscal priorities,” raising the corporate income tax rate would also “help attenuate inequality.”
Additionally, the plan would enact a 15% minimum tax on book income of large companies that report high profits, but have little taxable income.
“Current tax laws levy higher tax rates on labor income while entrenching preferences for capital income which disproportionately accrues to higher income taxpayers,” the Treasury Dept. said. “The President’s Plan would undo the ability of taxpayers to shield capital and corporate profits from tax liability. This would curtail profit shifting, bolster U.S. tax competitiveness, and raise much-needed tax revenue.”
The Biden Administration said one of the most important objectives of its tax plan is to “reduce incentives for the offshoring of American jobs while also limiting the ability of corporations to take advantage of corporate tax loopholes to shift their profits to low-tax jurisdictions.”
The Made in America tax plan would eliminate the incentive to offshore tangible assets by ending the tax exemption for the first 10% return on foreign assets.
Plus, the plan would disallow deductions for the offshoring of production.
Global Minimum Tax
The plan also calls for a global minimum tax (GMT) of 21% on multi-national corporations and would calculate the GMT on a per-country basis, thus “ending the ability of multinationals to shield income in tax havens from U.S. taxes with taxes paid to higher tax countries.”
Treasury Secretary Janet Yellen said this week the Biden Administration is working with G20 countries to agree on a global minimum, which she argued would end a “30-year race to the bottom on corporate tax rates.”
Ending Fossil Fuel Tax Subsidies
The tax plan would end subsidies to fossil fuels which the Biden Administration said is contributing to Climate Change resulting in “damage from both extreme heat and extreme cold, devastating storms and wildfires, and droughts.”
The Treasury Department’s Office of Tax Analysis estimates that eliminating the subsidies for fossil fuel companies would increase government tax receipts by over $35 billion in the coming decade.
Further, the Biden Administration asserted the “main impact would be on oil and gas company profits” and would have “little impact on gasoline or energy prices for U.S. consumers.”
Tax Incentives For Green Energy
Instead of providing tax subsidies to the fossil fuel industry, the President’s plan calls for replacing these with tax incentives to “promote nascent green technologies” for the purpose of speeding widespread adoption of electric vehicles.
Moreover, the plan would provide a ten-year extension of the production tax credit and investment tax credit for clean energy generation and storage, and making those credits direct pay.
The Biden Administration argued that the plan would result in “further deployment of alternative energy sources such as solar and wind power ” and “set the country on a path to 100% carbon pollution free electricity by 2035.”