Biden Tees Up Massive Infrastructure Plan, Supported by 28 Percent Corporate Tax

By:
Chris Gaetano
Published Date:
Mar 31, 2021
GettyImages-1169288059-bridge-minneapolis

The White House has released some of the specifics of its long-awaited infrastructure plan, a massive package that will cost at least $2 trillion, much of which will come from corporate tax increases, among them setting the rate to 28 percent.

The plan would spend $621 billion on transportation infrastructure, such as repairing roads and bridges; modernizing public transportation; addressing Amtrak's repair backlog; building a national network of 500,000 electric vehicle charging stations plus grants and incentives to buy electric vehicles; renovating ports, airports and waterways; and working to reconnect neighborhoods cut off or divided by previous transportation projects.

The package also contains $50 billion in dedicated investments to improving infrastructure resilience, such as supporting improvements in historically marginalized communities, as well as funding protections against natural disasters like wildfires and droughts.

Further, the president aims to spend $111 billion on water infrastructure improvements and repairs, including replacing 100 percent of the country's lead pipes and service lines and providing grants for upgrading and modernizing drinking water, wastewater, and storm water systems as well as performing environmental remediation.

The plan puts $100 billion toward digital infrastructure, such as expanded broadband coverage; removing previous barriers that prevented municipally owned or affiliated internet providers and rural electric co-ops from directly competing with private companies; and providing for subsidies to cover individuals' internet costs (with the recognition that this is not a long-term solution to the affordability problem).

There is also $100 billion allocated toward upgrades and improvements to the power grid through targeted investment tax credits that incentivizes the build-out of at least 20 gigawatts of high-voltage capacity power lines; a 10-year extension and phase down of an expanded direct-pay investment tax credit and production tax credit for clean energy generation and storage; a jobs program involving plugging oil and gas wells and restoring and reclaiming abandoned coal, hard rock, and uranium mines; more investments in the remediation and redevelopment of these brownfield and Superfund sites; providing tax incentives to develop next-generation industries in distressed communities in need of jobs; and the establishment of a new Civilian Climate Corps, essentially a jobs program.

The proposal would also allocate $213 billion intended to produce, preserve and retrofit more than a million affordable, resilient, accessible, energy efficient, and electrified housing units, 500,000 of which will be for for low- and middle-income home buyers. This ties into other plans for affordable housing, such as incentivizing land use reform, repairing and renovating the public housing stock, and providing grants and tax incentives for people to improve and renovate their homes.

The White House would also like to spend about $127 billion on repairing, renovating and improving school facilities in K-12 buildings, college campuses and childcare facilities. The plan has similar proposals regarding health care infrastructure, with an anticipated $400 billion in spending on things like improving hospitals and increasing access to home care.

The plan also contains $180 billion in research-and-development investments and small business incubators, $100 billion in workforce development programs and provisions making it easier to form or join a union.

Corporate Taxes

The plan will be largely paid for through corporate tax changes. They include:

* Increasing the corporate tax rate to 28 percent (from the 21 percent set in the Tax Cuts and Jobs Act (TCJA));
* increasing the minimum tax on U.S. corporations to 21 percent and calculating it on a country-by-country basis, so it hits profits in tax havens;
* Eliminating the rule that allows U.S. companies to pay zero taxes on the first 10 percent of return when they locate investments in foreign countries;
* Denying 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;
* Further restricting corporate inversions;
* Denying expense deductions for companies that offshore jobs and credit expenses;
* Completely eliminating the “Foreign Derived Intangible Income” provision of the TCJA, which the White House said gave corporations a tax break for shifting assets abroad ;
* Applying a 15 percent minimum tax on a corporation's "book income," provided that it has achieved a certain size;
* Eliminating all special tax provisions for fossil fuel companies; and
* Enhancing IRS enforcement

Bloomberg
noted that the plan's ambitious scope, combined with its major tax reforms, will likely draw vigorous opposition from both Republicans and conservative-leaning Democrats; the latter, in fact, might become more problematic than the former, given the very slim majority the party has in both the House and Senate.

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