U.S. President Joe Biden receives an economic briefing with Treasury Secretary Janet Yellen in the oval office of the White House in Washington on January 29, 2021.
Kevin Lamarque | Reuters
Treasury Secretary Janet Yellen on Wednesday announced the changes proposed by the Biden administration to the corporate tax code and said in detail that the plan would be fairer, would reduce incentives for companies to change factories and income abroad and would generate revenue for national priorities.
Treasury officials said the Made In America fiscal plan, linked to President Joe Biden’s $ 2 trillion infrastructure overhaul, would recover some $ 2 trillion in corporate profits in the U.S. currently derived abroad.
Estimates calculated by the Treasury Department and the Joint Tax Committee found that setting incentives for offshore companies could increase revenue by $ 700 billion.
In its entirety, the Made In America reforms are estimated to generate about $ 2.5 trillion in 15 years in an effort to pay for eight years of spending on roads, bridges, traffic, 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 plan that goes overboard. It’s a unique investment in generation in America, unlike everything we’ve done since we built the interstate highway system and won the space race decades ago,” he said. Biden.
“It’s a plan that makes millions of Americans work to fix what has been broken in our country: tens of thousands of miles of roads and highways, thousands of bridges that desperately need to be repaired. It’s also a plan.” infrastructure needed for tomorrow, ”he said. added.
The 17-page Treasury report is likely to act as a blueprint for lawmakers looking to steer one of the largest spending and tax proposals through Congress during 2021.
Key provisions of the plan include raising the U.S. corporate tax rate to 28% from 21% and imposing minimum taxes on both foreign income and domestic profits that corporations report to shareholders, which are expected to increase the tax bill of the United States.
“Larger, more profitable U.S. 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 eliminate the prejudices of current tax legislation that favor the relocation of economic activity and would put an end, to a large extent, to the change of corporate profits with a minimum country tax. by country “.
Biden said Wednesday he would 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 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 few economic benefits, noting that foreign investors received a significant share of the gains.
The White House proposal would also affect key elements of Trump’s 2017 corporate tax cuts, including base erosion and anti-abuse tax, known as “BEAT.” Although the BEAT was designed to punish companies that transfer profits abroad, it has been criticized for taxing some non-abusive transfers and having lost those that use tax avoidance strategies.
The minimum 15% tax proposed by the president on corporate accounting income, aimed at those who report large profits to investors, but low tax payments, would only apply to companies with profits in excess of $ 2 billion, relative to the level current $ 100 million.
According to Treasury Department estimates, this could affect about 45 companies, with an average company facing the tax with an increase in the minimum tax rate of about $ 300 million annually.