- How will provisions under President Biden’s newly proposed $2 trillion infrastructure bill fare for businesses—both big and small, local and abroad.
Last month, Joe Biden announced his Landmark Infrastructure Plan (LIP): a new budget that would pump more than $2 trillion into government spending for national infrastructure by sucking the same amount from corporations through major tax hikes. If approved, corporations would be looking at the highest tax rates the U.S. has seen since the Clinton years and one of the highest overall corporate tax burdens worldwide.
Total Projected Revenue: $2.5 trillion
On a Domestic Level…
- Increased Corporate Tax Rate: First and foremost, Biden wants to increase the U.S. Corporate tax rate up to 28% from the 21% currently exhibited under Trump’s TCJA. Moreover, Biden’s plan would repeal several other provisions from the TCJA.
- Minimum Tax Rate for Big Business: Corporations with high annual profits (sources on the exact amount vary) will be subject to a 15% minimum tax rate, preventing high earners from using deductions and loopholes to avoid tax payments.
On an International Level…
- Increased Tax on Global Intangible Low Tax Income (GILTI): The plan looks to establish a global minimum tax rate for multinational corporations at a minimum of 21%. This is double the current rate of 10.5%. The OECD (Organization for Economic Co-Operation and Development) has been toying with the idea of establishing a global minimum tax rate, but on a much smaller scale, suggesting a mere 12% compared to Biden’s 21%.
- New Method for Assessing GILTI: Biden wants to require multinational companies to calculate tax on a country-by-country basis. This would, in theory, prevent multinational corporations from using high-tax countries to hide profits in offshore tax havens, effectively revoking offshoring evasion tactics and encouraging more U.S.-based jobs.
- Revoke Offshoring Incentives: A 10% surtax on offshoring, coupled with a 10% “Made in America” tax credit look to bring more manufacturing and service jobs back to U.S. soil.
- Stopping Harmful Inversions and Ending Low-tax Developments (SHIELD): The SHIELD provision would disallow companies with foreign, low-tax headquarters from shifting incomes to tax havens.
- Eliminate Exemption on Foreign Assets: It would also eliminate the current tax exemption on the first 10% of foreign assets.
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