On Wednesday, President Joe Biden unveiled the American Jobs Plan, a roughly $2 trillion infrastructure plan to modernize thousands of miles of roads, fix thousands of bridges, expand broadband access and replace all lead pipes carrying drinking water.
The centerpiece of funding for the plan is a corporate tax reform, the Made in America Tax Plan. It is intended that the spending will be done over fifteen years paid for by business tax increases. If enacted, it would be the largest tax increase at the federal level since 1942.
The Made in America Tax Plan proposes to raise the federal corporate income tax rate from 21% to 28%, a return to the level before the 2017 TJCA re-write of the tax code. The plan would also increase taxes on corporations in several other ways:
- Raise the tax on Global Intangible Low Tax Income (“GILTI”) to 21 percent, calculate it on a country-by-country basis so it hits profits in tax havens, and eliminate the exemption of a 10 percent return on tangible investment abroad (“QBAI”);
- Impose a new 15 percent minimum tax on corporate book income, which would be levied on a firm’s financial profits reported to its investors, for firms with revenue over $100 million;
- Repeal the Foreign-Derived Intangible Income (“FDII”) deduction, which incentivizes firms to move intellectual property (“IP”) into the U.S.;
- Provide a tax credit for certain onshoring activity and deny expense deductions on jobs that were offshored;
- Increase corporate tax enforcement; and
- Eliminate certain deductions and credits for the fossil fuel industry.
Furthermore, the American Family Plan, a second plan aimed at aiding employment which would include tax elements has been promised in a couple of weeks.
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