Companies torn on Biden’s $2.3T American Jobs Plan
Connecticut’s business community is giving a mixed reception to President Joe Biden’s new $2.3 trillion American Jobs Plan — expressing support for its focus on ambitious infrastructure investments, but pushing back on its proposal for how companies would help fund the legislation.
A major source of concern for many firms is the bill’s proposed tax changes, which include a hike on the corporate tax rate from 21 percent to 28 percent and a 21 percent global minimum tax aimed at preventing companies from moving profits overseas to avoid taxation.
“Businesses were really excited about investments in infrastructure,” Chris DiPentima, CEO and president of the Connecticut Business & Industry Association, said in an interview Friday. “Then, when the details came out with how it would be paid for — with a seven percent increase on the corporate tax as well as a global minimum tax — businesses were very concerned about that. While it may create jobs through construction and infrastructure, it could take away jobs in other sectors because businesses would have less money to invest in their businesses.”
The Business Roundtable — an association of chief executives of major companies across the country — took a similar position. Its members include the CEOs of Norwalk-based Booking Holdings, Bloomfieldbased Cigna, Stamford-based Pitney Bowes, New Britain-based Stanley Black & Decker, Stamford-based Synchrony, Norwalk-based
Xerox and Greenwich-based XPO Logistics.
“By significantly increasing taxes on corporations, the proposal would be counterproductive to the goal of increasing economic growth and job creation,” Business Roundtable President and CEO Joshua Bolten said in a statement. “Such tax increases would make the United States uncompetitive as a place to do business and make U.S. companies uncompetitive globally, slowing recovery and hurting American job creators and employees.”
Bolten argued that there were “better ways” to support infrastructure investments.
“The Roundtable has long supported user-pays models, which includes business paying its share without jeopardizing a stronger and more equitable economic foundation for all Americans,” he said. “We also support including measures to streamline the permitting process, which are essential to accelerating U.S. economic recovery and attracting private investment.”
In contrast, the corporate community was generally much more enthusiastic about the 2017 Tax Cuts and Jobs Act, which was enacted under then-President Donald Trump and a Republican-controlled Congress. The legislation lowered the corporate tax rate from 35 percent to 21 percent.
Many corporate bottom lines ballooned in the wake of the tax overhaul. U.S. companies responded in 2018 by using their windfalls to repurchase a record $1 trillion of their own shares.
The buybacks sparked criticism from many, including Congressional Democrats, who argued that the strategy exacerbated income inequality and undermined long-term economic growth.
DiPentima responded that many companies used the lower tax expenditures to invest in their workforces and technology. He also expressed concerns about the impact of frequent fluctuations in the tax rate.
“Having a tax rate go down, then four years later goes up — and then what happens four years from now?” DiPentima said. “That uncertainty at the state and federal level is really what drives businesses crazy. They just don’t know what types of investments they can make for the long term if they’re not certain what their expenses will be for state or federal mandates.”
Looking to spur economic growth
Biden has framed the American Jobs Plan as a transformative commitment in the country’s infrastructure.
“It’s not a plan that tinkers around the edges,” Biden said Wednesday. “It’s a once-in-a-generation investment in America unlike anything we’ve seen or done since we built the interstate highway system and the space race decades ago. In fact, it’s the largest American jobs investment since World War II. It will create millions of jobs, goodpaying jobs.”
In the proposal’s largest funding block, more than $620 billion would be allotted for transportation infrastructure including roads, bridges, public transit and electricvehicle charging stations, according to the White House.
Other key investments would include $111 billion to replace lead water pipes and upgrade sewers, $100 billion to support broadband internet access and $100 billion for upgrades to the power grid to deliver “clean” electricity.
Eversource, which provides electricity to approximately 1.3 million customers in Connecticut and supplies water through its Aquarion Water Co. subsidiary, expressed support for the legislation.
“Wednesday’s announcement from the Biden Administration on its American Jobs Plan represents significant progress toward creating a more resilient, reliable electric transmission system ready to integrate new, clean energy in the coming years,” said Bill Quinlan, Eversource’s president of transmission.
While differing on issues such as tax reform, elected officials and executives share the hope that the public spending of the past year — including the $1.9 trillion American Rescue Plan that Biden signed into law last month and the two previous stimulus bills passed since March 2020 — will help spur an economic comeback from the massive blow inflicted by the coronavirus pandemic.
Data released last month by the state Department of Labor showed that Connecticut’s economy lost 122,500 jobs in 2020 — exceeding the approximately 119,000 positions it lost in its 2008-2010 recession.
“How we spend those dollars could accelerate Connecticut’s economic recovery and support growth for decades to come. It’s a tremendous opportunity, if done right,” DiPentima said. “If done wrong, we could be lagging the country for the next 10 to 20 years because we unfortunately didn’t invest those dollars wisely.”