BIDEN TO UNVEIL INFRASTRUCTURE PLAN
Administration eyes corporate tax boost to fund $2T package
President Joe Biden intends to pay for the $2 trillion package of infrastructure spending he will propose today with a substantial increase in corporate taxes, people briefed on the plan said Tuesday.
The scale of the infrastructure program — one of the most ambitious attempts in generations to shore up the nation’s aging roads, bridges, rail lines and utilities — is so big that it will require 15 years of higher taxes on corporations to pay for eight years of spending, they said.
Despite his ambitious programs, Biden had pledged that his long-term economic agenda would not add further to the growing national debt. But the fact that his proposed tax increases would not cover his spending over the same period shows the challenge he has in balancing his goals and the deficit.
Biden’s proposals include raising the corporate tax rate to 28 percent from 21 percent and efforts to force multinational corporations to pay significantly more in tax to the United States on profits they earn and book overseas. The corporate tax rate had been cut under President Donald Trump from 35 percent to 21 percent.
The new plans come on top of the $1.9 trillion stimulus plan Biden signed into law this month, which was financed
entirely by borrowing and was passed with no Republican support. The programs reflect Biden’s campaign promises and a leftward shift in his party in recent years.
If his full set of proposals became law, they would mark a new era of ambitious federal spending to address long-standing social and economic problems. Their odds of passing Congress have risen in the midst of a pandemic in which lawmakers have approved record amounts of government spending to rescue the economy from recession.
Biden is set to lay out his infrastructure plan in an afternoon speech in Pittsburgh. It is the first step in a two-part agenda to overhaul American capitalism, fight climate change and attempt to improve economic productivity.
Together, those two proposals could cost as much as $4 trillion between spending increases and tax incentives. The second phase of the proposals is expected to include tax increases on high-earning individuals.
The spending in the first phase of Biden’s plan includes a wide range of investments
in physical infrastructure, including highways, mass transit and electric vehicle charging systems and upgrades to water pipes, the electric grid and veterans’ hospitals. It also includes a big increase in federal research and development spending and efforts to provide home-based care to older and disabled Americans.
The second step, which officials have suggested will come next month, will feature spending and tax credits meant to invest in what liberal economists call human infrastructure. It will
include aid to the poor, paid leave for workers and measures meant to reduce the cost of child care and help women work and earn more.
Proposals to pay for that second step include tax increases on high-earning individuals and the wealthy, like an increase in the top marginal income tax rate to 39.6 percent from 37 percent. The details of those proposals largely remain in line with the infrastructure plans that administration officials presented to Biden last week.
Internal administration documents and people familiar with the plans suggest the first phase will include $625 billion for roads, bridges, transit, rail, ports and electric vehicle charging stations, along with $25 billion for federal government infrastructure including for veterans. That phase will also includes hundreds of billions of dollars for utilities, water delivery systems, rural broadband, worker training, advanced manufacturing and research and development.
The first package will now include hundreds of billions of dollars to support home-based care for older and disabled Americans, a change from the plans that aides had drawn up earlier this month.
The unusual 15-year window for a tax increase to offset spending could help Democrats if they choose to attempt to push Biden’s plan via budget reconciliation, a parliamentary process that would allow them to bypass the 60-vote requirement imposed by the Senate filibuster and pass the plan with only Democratic votes.
That process starts with the passage of a budget resolution, which typically covers 10 years of taxes and spending. But Democrats could extend the resolution to cover 15 years, allowing increased revenue from Biden’s corporate tax increases to pay off spending programs that ended after eight years. Senate Republicans considered extending the budget window when they used the reconciliation process to pass more than $1.5 trillion in tax cuts in 2017, but they ultimately decided to stick with a 10-year window.