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 the plan would be fairer, reduce incentives for companies to move factories and revenues to 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 corporate profits in the United States. currently derivatives abroad.
Estimates calculated by the Treasury Department and the Joint Committee on Taxation found that setting incentives for offshore companies 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 the Eisenhower 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 race. ‘space decades ago, ”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 fixing . It is also a necessary infrastructure plan for tomorrow, “he said. added.
The 17-page Treasury report will likely serve as a blueprint for lawmakers seeking to guide one of Congress’ most important spending and taxation proposals in 2021.
Key provisions of the plan include increasing the rate for U.S. corporations from 21% to 28% and imposing minimum taxes on foreign income as well as domestic profits that corporations report to shareholders, which is expected to increase the US corporate tax bill.
“The largest and most profitable US companies are subject to 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 biases in current tax legislation that favor the offshoring of economic activity and largely end corporate profit shifting with a minimum country tax. country.”
Biden said on Wednesday that he would be willing to raise the corporate rate by a lower amount and that he is not married at 28%.
Business groups are opposing the changes, saying they would hurt investment and the ability of U.S. companies to compete for global affairs. 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 hit 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 transfer their profits overseas, it has been criticized for taxing some non-abusive transfers and ignoring those using 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 business facing tax seeing a minimum tax increased by around $ 300 million each year.