The Made in America Tax Plan will pay in full for over $ 2 trillion in infrastructure proposals over a 15-year period, according to a detailed Treasury report released Wednesday.
President Biden aims to make American businesses and workers more competitive by eliminating incentives to move investment abroad, reducing profit shifts and pushing back what Government officials call it “race to the bottom”“And his administration has prioritized the fight against climate change, so he is refocusing on clean energy production.
Republican lawmakers and some corporate groups are already opposed to the plan, as raising corporate tax rates puts the United States at a competitive disadvantage around the world and uncovers the economic crisis caused by the pandemic. It claims that it will slow economic growth as it strives for. Meanwhile, at least two Democratic senators and a number of congressmen have already voiced opposition to some hikes, making it virtually impossible to pass without additional changes.
This report arrives while Biden is driving the infrastructure plan he introduced last week. The tax system allocates 1% of GDP to infrastructure regulations in eight years. According to detailed reports, the tax system will raise the necessary funds and continue to generate income permanently.
“By choosing to compete on taxes, we neglected to compete on the skills of our workers and the strength of our infrastructure. We are proposing this Made in America tax system because this is a self-defeating competition. The game we play. ” “Americans will compete for their ability to create talented workers, state-of-the-art research, and state-of-the-art infrastructure, not whether they have lower tax rates than Bermuda or Switzerland.”
Labor income as a percentage of national income has declined compared to capital in recent decades, according to Treasury officials. At the same time, while US companies are the most profitable in the world, the US does not collect corporate tax revenue as a share of GDP than most other developed countries of the Organization for Economic Co-operation and Development. The report also states that US multinationals actually pay only 7.8% federal income tax. The goal is to refocus corporate tax revenues away from what the report calls “historical and international norms.”
“The US corporate tax system has been broken for a long time, and so has our way of thinking about corporate tax,” said Jellen, who called the plan “win-win” for businesses and governments.
As part of the proposal, Biden demanded that the corporate tax rate be raised from the 21% enacted under President Trump’s tax system to 28%. To ensure that companies “pay a fair share,” the plan also provides a 15% minimum book income tax on large companies with incomes of $ 2 billion or more that report high income but low taxable income. Imposing. In recent years, about 45 companies would have paid a minimum tax based on the president’s proposal, taking into account other changes, the report said.
President Biden said Wednesday that he was ready to negotiate payment methods for infrastructure plans, including a corporate tax rate lower than the proposed 28%, in a backlash from some lawmakers and businesses. He said he had to find a way to pay for it.
“I accept the idea of how to pay for this plan, with one exception. I will not impose a tax increase on people who earn less than $ 400,000 a year. This without others violating it. If you have an idea of how to pay for an investment, that rule, they should come forward. There are opportunities of all kinds. ”
The president argued that his proposal for a corporate tax rate of 28% was between the old tax rate of 35% and the current tax rate of 21%. He also blew up the company for avoiding tax payments, saying it was unfair to American taxpayers. Mr Biden was ashamed of critics of his tax plan, asking where their anger was when the tax cuts implemented under President Trump were brought to the wealthy.
“I’m not trying to punish anyone, but I criticize it, probably because I’m from a middle-class neighborhood. I’m tired of ordinary people running away,” he said. Added.
At the same time, the plan will calculate the global minimum tax on U.S. multinationals on a country-by-country basis, raising the current minimum tax from 10.5% to 21% and ending the tax exemption on the first 10% of revenue. .. Foreign assets. Authorities claim that this helps eliminate incentives for offshore factories and other assets.
The proposal also calls for a global minimum tax to end what Yellen called “race to the bottom.” According to the report, the proposal will implement the rules through the refusal of US deductions for payments to foreign companies in countries where the state has joined the agreement and is not taxing to level the competition. Between foreign and US companies that includes strong incentives for.
Meanwhile, the Biden administration is also pushing to change the direction of clean energy production with resources and new research. The tax system not only eliminates fossil fuel subsidies, but also provides tax incentives focused on green technologies such as electric vehicles, solar power and wind power. The Treasury Department of Tax Analysis estimates that abolishing subsidies to fossil fuel companies will increase revenues by more than $ 35 billion over a decade. However, the change in incentives as the government aims to pave the way for 100% carbon-free electricity by 2035 when combined with other tax-exempt initiatives such as energy efficiency and clean electricity standards. The cost of this is unknown.
In addition, the administration aims to provide the IRS with resources to pursue large corporations that do not meet their tax obligations. The IRS enforcement budget has fallen by 25% over the last decade. Treasury officials did not provide a specific amount for the government’s efforts to prepare the budget, but said the goal was to reverse the audit rate in recent years.
The report looks like this Democratic Senator Announces Unique Framework Review of international tax system. Treasury officials said they were working with the Senate Finance Committee to develop the proposal, making no significant difference as they are moving towards the same goals in passing infrastructure and tax planning. It was.
Biden’s tax system will pay the full amount for infrastructure proposals, the Treasury says
Source link Biden’s tax system will pay the full amount for infrastructure proposals, the Treasury says