President Joe Biden will announce details of his infrastructure plan in Pittsburgh on Wednesday.
Biden plans to use new tax revenue to offset the costs of planned infrastructure and social safety net investments. White House press secretary Jen Psaki promised Monday, “The president has a plan to fix our infrastructure and a plan to pay for it.” The details may not be finalized just yet.
For now, Forbes asks who the biggest losers will be under a Biden tax plan:
Biden is a proponent of raising the corporate tax rate from 21% to 28%—a major hike, but still 7 percentage points less than the 35% corporate tax rate under Presidents Obama, Bush and Clinton. He wants to impose a 15% minimum tax on big companies too, meaning that even if a company takes a lot of credits and deductions it would still have to pay taxes of at least 15% on its earnings. That’s intended to prevent the country’s largest companies like Amazon from using those deductions and credits to skirt their fair share of taxes.
Companies with large portions of income from overseas or those who pay effective tax rates below 21%—e.g. data storage company Seagate Technology, casino player Las Vegas Sands, semiconductor maker Broadcom, and money transfer giant Western Union—could be especially vulnerable to tax changes that would target that income, according to Goldman Sachs. Goldman pegs Las Vegas Sands’ foreign income exposure at 83%
According to a recent analysis by Tax Notes chief economist Martin Sullivan, 33 of the 100 largest U.S. companies might be on the hook for Biden’s 15% minimum tax, including giants like AT&T, Nvidia, Adobe, JPMorgan Chase, Intel and Target. Altogether, those 33 companies would owe an extra $20 billion each year if that new tax were enacted by itself, though Sullivan notes that the ultimate effect of the minimum tax will probably be smaller than that since it’s likely to come alongside other corporate tax hikes.
Axios expects Biden’s plans to impose a 28% minimum rate on the wealthy, make it harder for small businesses to claim deductions, and change how estates get taxed may not survive to see a final vote. If so, plans for a dollar-for-dollar tax match may be aspirational.
Axios adds:
Be smart: Biden’s approach to taxes is both ideological and political. He views increasing taxes on corporations and the wealthy as a fundamental matter of fairness and a way to reduce income inequality.
- But moderate Democrats could revolt, and Senate Majority Leader Chuck Schumer may demand Biden cut taxes by removing the limits on state and local deductions.
The bottom line: Officials expect most of the haggling to happen on the corporate rate, both on the top percent and the global minimum for big multinationals.
- Repealing the Trump tax cuts on the wealthy is a much easier lift. But it raises, at most, around $150 billion — not nearly enough to pay for the massive infrastructure project that “Amtrak Joe” is contemplating.
I knew Biden rode Amtrak, but “Amtrak Joe”? Guess I was out of the loop that day.
It has been a long time since this country invested in infrastracture on a national scale. Not since my childhood. For the longest time Republican austerity fetishists argued that while we may be the richest country in the world, America could no longer afford Americans.
“We used to do big things. I have hope we will again,” Susie Madrak tweeted last fall. Maybe we will all have our hope restored.