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 promoted the Biden administration’s proposed changes to the corporate tax code and said in detail that the plan would be more accurate, reduce incentives for companies to move factories and revenue abroad, and generate revenue for priorities. internally.
Treasury officials said the Made In America tax plan, linked to President Joe Biden’s $ 2 trillion infrastructure review, will recover about $ 2 trillion from US corporate profits currently coming from abroad.
Estimates calculated by the Treasury Department and the Joint Tax Committee found that setting incentives for offshore business could increase revenue by $ 700 billion.
In total, Made In America reforms are estimated to generate about $ 2.5 trillion over 15 years in an effort to pay for eight years of spending on roads, bridges, transit, broadband and other projects.
Biden spoke about his administration’s plan Wednesday afternoon at the Eisenhower Executive Office building in Washington.
“It’s not a plan that sways around the edges. It’s a one-generation investment in America, unlike anything I’ve done since I built the interstate highway system and won Race Space decades ago,” he said. said Biden.
“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 in desperate need of repairs. It’s also a plan to infrastructure needed for tomorrow, “he said. added.
The 17-page Treasury report is likely to act as a blueprint for lawmakers who want to guide one of the largest spending and tax proposals through Congress in 2021.
Key provisions of the plan include raising the U.S. corporate rate to 28% from 21% and imposing minimum taxes on both foreign income and domestic earnings that corporations report to shareholders, all of which are expected to increase the U.S. tax bill. .
“The largest and most profitable U.S. companies face lower tax rates than ordinary Americans,” Treasury officials said in a statement released Wednesday. “The Made in America tax plan would reverse these trends … The plan would eliminate prejudices from current tax legislation that favors the relocation of economic activity and would largely end the change in corporate profits with a minimum tax from country to country.”
Biden said on Wednesday that he will be open to raising the corporate rate by a smaller amount and that he is not married by 28%.
Business groups oppose the changes, saying it would affect investment and the ability of US companies to compete for global business. The Treasury report claims that the 2017 tax cuts went too far and generated low economic benefits, noting that foreign investors received a significant share of any gains.
The White House proposal would also touch on major elements of Trump’s 2017 corporate tax cuts, including the basic erosion tax and the anti-abuse tax, known as the “BEAT.” Although BEAT was designed to punish companies that move profits overseas, it has been criticized for taxing non-abusive transfers and for the lack of those who use tax avoidance strategies.
The president’s proposed 15% minimum income tax on accounting firms, which target those who report high profits to investors but low tax payments, will only apply to companies with earnings of more than $ 2 billion, compared to the current level of $ 100 million. of dollars.
According to Treasury Department calculations, this could have an impact on about 45 corporations, with the average tax-facing company seeing an increased minimum tax debt of about $ 300 million each year.