US President Joe Biden receives an economic briefing with Treasury Secretary Janet Yellen in the Oval Office of the White House in Washington, January 29, 2021.
Kevin Lamarque | Reuters
Treasury Secretary Janet Yellen on Wednesday touted the Biden administration’s proposed changes to the corporate tax code and said in detail that the plan would be fairer, reduce incentives for companies to relocate their factories and income abroad and generate income for national priorities.
Treasury officials said the Made In America tax plan, tied to President Joe Biden’s $ 2 trillion infrastructure overhaul, would recoup an estimated $ 2 trillion in US corporate profits currently being derived. abroad.
Estimates calculated by the Treasury Department and the Joint Committee on Taxation revealed that setting the incentives for offshore activities could generate an amount of revenue equal to $ 700 billion.
Taken together, the Made In America reforms are expected to generate around $ 2.5 trillion over 15 years to pay for eight years of spending on roads, bridges, transit, broadband, and other projects. .
Biden spoke about his administration’s plan Wednesday afternoon from Eisenhower’s executive office building in Washington.
“It’s not a tinkering plan. It’s a one-time investment in America, unlike anything we’ve done since we built the interstate highway system and won the space race ago. decades, ”Biden said.
“It’s a plan that puts millions of Americans to work to fix what’s broken in our country: tens of thousands of miles of roads and highways, thousands of bridges desperately in need of repair. C ‘is also a necessary infrastructure plan for tomorrow, “he added.
The 17-page Treasury report will likely serve as a framework for lawmakers seeking to guide one of Congress’ biggest spending and tax proposals in 2021.
Key provisions of the plan include raising the rate for U.S. corporations from 21% to 28% and imposing a minimum tax on foreign income as well as domestic profits that corporations report to shareholders, which should all increase the tax bill for American corporations.
“America’s largest and most profitable companies face lower tax rates than ordinary Americans,” Treasury officials said in a presentation released Wednesday. “The Made in America tax plan would reverse these trends. … The plan would remove the biases in the current tax legislation that favor the offshoring of economic activity and largely end corporate profit shifting with a country minimum tax. by country.”
Biden said on Wednesday that he would be open to a smaller increase in the corporate rate and that he was not married at 28%.
Business groups oppose the changes, saying they would hurt investment and the ability of U.S. companies to compete for global business. The Treasury report argues that the 2017 tax cuts went too far and generated little economic benefit, noting that foreign investors received a significant chunk of the gains.
The White House proposal would also touch on major elements of Trump’s corporate tax cuts in 2017, including base erosion and the anti-abuse tax, known as “BEAT.” . Although the BEAT was designed to punish companies that move profits overseas, it has been criticized for taxing some non-abusive transfers and missing those that employ tax evasion strategies.
The president’s proposed 15% minimum tax on corporate accounting income, intended for those reporting large profits to investors but low tax payments, would only apply to companies with profits over $ 2 billion dollars, compared to the current $ 100 million.
According to Treasury Department calculations, this could impact around 45 companies, with the average tax-facing company facing their minimum tax increase by around $ 300 million each year.