President Joe Biden is proposing to increase corporate taxes to help pay for his proposed infrastructure bill, the American Jobs Plan. During his White House briefing at the end of March, the president said the Made in America Tax Plan is expected to raise more than $2 trillion over the next 15 years. According to Biden, this revenue will not only pay for the spending proposed in the American Jobs Plan, but would reduce deficits on a permanent basis. The tax plan, he said, focuses on fixing “the corporate tax code so that it incentivizes job creation and investment…in the United States, stops unfair and wasteful profit sharing to tax havens, and ensures that large corporations are paying their fair share.”
Much of Biden’s plan involves provisions that apply to multinational corporations, but there are several proposals that would affect U.S. corporations, highlighted below.
- Increase corporate tax rate from 21% to 28%
- Impose a 15% minimum tax on corporations with book income (income corporations use to report their profits to investors) exceeding $100 million.
- Strengthen enforcement against corporations and high-income Americans by increasing funding and resources to the IRS for the purpose of raising audit rates.
While corporate tax increases are in the offing under the Made in America Tax Plan, the American Jobs Plan proposes a number of tax credits, which include:
- Point of sale rebates and tax incentives to buy American-made electric vehicles;
- Business tax credit for low- and middle-income families and small businesses to invest in disaster resilience;
- Various tax credits to encourage investment in or production of clean energy infrastructure
- Targeted tax credits to expand affordable housing rental opportunities in underserved communities
- The Neighborhood Homes Investment tax credit to build or rehabilitate 500,000 homes
- Expanded home and commercial efficiency tax credits under the Weatherization Assistance Program;
- A tax credit to encourage the building of child care facilities at places of work; and
- An expansion of the 48C tax credit program to encourage U.S. manufactures to supply clean energy projects with American-made parts and equipment.
Biden’s Made in America Tax Plan tax plan has been introduced to Congress, where other Democratic lawmakers have countered with separate tax proposals of their own. These measures will have to undergo debate and modification, as well as significant opposition including competing legislation by Republicans, before being sent to the president for his signature.
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Mark Kashgegian, CPA, is a Partner with Antares Group, Inc. He can be reached at email@example.com.