US plans to raise taxes on major corporations for infrastructure projects

*The White House’s schematic for the tax increase is to help fund its economic agenda, including upgrading roads, bridges, seaports, airports, and transit systems; building a renewed electric grid; and delivering high-speed broadband to all American consumers

Alexander Davis | ConsumerConnect

In an attempt to introduce corporate tax increase that could be also be used to address climate change and racial inequities in the country, the United States (US) President Joe  Biden administration has laid out its blueprint for a corporate tax overhaul, requiring large businesses to pay more.

The White House’s schematic for the tax hike is to help fund its economic agenda, which includes the refurbishing of 20,000 miles of roads and 10,000 bridges; upgrading ports, airports, and transit systems; building a renewed electric grid; and delivering high-speed broadband to all Americans.

President Biden said the corporate tax increase would also be used to address climate change and racial inequities in the most powerful country on earth, agency report stated.

It was gathered that if all goes according to plan and the tax increase is enacted by Congress, the United States’ coffers would see an additional $2.5 trillion in revenue over 15 years.

To make his plan work, Biden proposes raising the corporate tax rate from 21 percent to 27 percent. While that may sound high, it’s actually been much higher.

As part of a 2017 tax law, former President Donald Trump reduced the corporate tax rate from 35 percent to 21 percent.

What resistance will Biden administration get?

Biden’s plan will likely meet some resistance from American companies that have profited from Trump’s change to the tax code.

Google, for example, used two legal tax strategies ─ the Double Irish and the Dutch Sandwich ─ to save it billions in US taxes by forming a subsidiary in Ireland that turns intellectual property into tax-deductible royalty payments.

But Google is not the only one using these kinds of tax strategies. A GAO study found that close to 66 percent of all US corporations did not pay any federal income tax at all.

However, as the proposed change may cost big US companies more, Biden’s plan may find some early support from Amazon Chief Executive Officer (CEO) Jeff Bezos.

While Amazon has been successful in softening its tax liability in the past, Bezos gave the notion of raising corporate taxes a personal thumbs-up earlier this week.

However, he stopped just short of saying he supports President Joe Biden’s plan for the increase completely.

Bezos said in a statement that “we support the Biden Administration’s focus on making bold investments in American infrastructure.

“We recognise this investment will require concessions from all sides —both on the specifics of what’s included as well as how it gets paid for (we’re supportive of a rise in the corporate tax rate).

The tech and e-commerce giant’s CEO stated: “We look forward to Congress and the Administration coming together to find the right, balanced solution that maintains or enhances US competitiveness.”

In what appears like a ‘ending a race to the bottom’ in the US Government’s approach, Treasury Secretary Janet L. Yellen in her in remarks to The Chicago Council on Global Affairs, noted that Bezos’ buy-in is meaningful, both for the economy and the workforce.

If the executive’s peers support Biden’s plan, it could end what Yellen called a “30-year race to the bottom” of corporate taxation, one she said has been catastrophic for the American economy.

Yellen said: “Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth, and prosperity.”