highways
Mar 31, 2021

Biden Administration Debuts American Jobs Plan, Made in America Tax Plan

American Jobs Plan

On Wednesday, March 31, 2021, the Biden Administration released their American Jobs Plan, which constitutes the first of two sections of a larger infrastructure package. This section contains roughly $2.5 trillion in federal spending over eight years, with the majority of that coming in one-time investments.

 Takeaways

  • $621 billion for surface transportation modernization, including $115 billion for bridges, roads, highways and main streets and $20 billion for road safety
    • Modernizes 20,000 miles of roadway
    • Fixes the 10 most economically significant bridges in need of repair, plus the worst 10,000 smaller bridges across the U.S.
    • Includes $25 billion for airports and $17 billion for ports/waterways
  • $174 billion for Electric Vehicles (EV)
    • Establishes grant and incentive programs to build a national network of 500,000 EV chargers by 2030
    • Gives consumers point-of-sale rebates and tax incentives to buy American-made EV
  • $111 billion for safer drinking water to replace all lead pipes and service lines in America
  • $100 billion for high-speed broadband for 100 percent coverage
  • $100 billion to upgrade the U.S. power infrastructure, including tax credits for certain transmission line upgrades
  • $213 billion to “produce, preserve, and retrofit more than two million affordable and sustainable places to live"
  • $137 billion for public schools, community colleges and child-care facilities
  • $100 billion for workforce development
  • $400 billion for “expanding access to quality, affordable home- or community-based care for aging relatives and people with disabilities

Made in America Tax Plan

Concurrently, the Biden Administration released their Made in America Tax Plan to help fund the infrastructure proposal. The plan consists of corporate tax changes which the administration suggests will raise over $2 trillion within 15 years.

 Takeaways

  • Sets corporate tax rate at 28 percent
    • The 2017 Tax Cuts and Jobs Act set the rate at 21 percent
  • Sets global minimum tax rate for U.S. multinationals at 21 percent
    • Eliminates a rule which allows U.S. companies to pay zero taxes on first 10 percent of return when they locate investments in foreign countries
  • Contains language “proposing to encourage” other countries to adopt strong minimum taxes on corporations
    • Denies deductions to foreign corporations on payments that “strip profits out of the U.S.” if they are headquartered in a country which does not adopt a strong minimum tax
    • Commitment to engage with multilateral negotiations on global minimum tax rate
  • Prevent U.S. companies from claiming tax havens as their residence
  • Prevent companies expense deductions for taking jobs abroad
    • Hand-in-hand with tax credit to support “onshoring” jobs
  • Eliminates tax incentives under 2017 tax law for “Foreign Derived Intangible Income” (FDII)
    • All FDII deduction repeal revenue will go towards U.S. Research and Development
  • 15 percent minimum tax on corporations “book income” (income used to report profits to investors)
  • Eliminates all tax advantages for fossil fuels and other polluting industries
    • Restores payments from polluters into the Superfund Trust Fund
  • Strengthen IRS’ capacity to audit large corporations
    • Paired with broader enforcement initiative addressing tax evasion which the Biden Administration will release “in the coming weeks"

Congress will spend the next several months drafting legislation that largely reflects the proposal announced today by President Biden. As the American Jobs Plan develops, McGuireWoods Consulting will continue to provide updates as we engage with the administration and Congress on the legislation.