President Biden Includes Significant Corporate Tax Increases with Infrastructure Plan

On March 31, 2021, President Biden unveiled the American Jobs Plan. Over the next eight years, the $2 trillion jobs proposal would invest in rebuilding the nation’s infrastructure and promotion of environmentally friendly practices. Funding for the plan would be achieved in part through corporate tax changes. Additional details of the American Jobs Plan are available in the White House Fact Sheet.

Along with the American Jobs Plan, the Biden Administration laid out the Made in America Tax Plan which proposes changes that will raise more than $2 trillion over the next 15 years. Below are key tax proposals of the Made in America Tax Plan as listed in the White House Fact Sheet:

  • Increase the corporate tax rate from 21% to 28%
  • Create a new corporate minimum tax of 15% on book income of large corporations
  • Increase IRS corporate enforcement budget
  • Increase the tax rate on global intangible low-taxed income (GILTI) from 10.5% to 21%, eliminate the 10% return on qualified business asset investments (QBAI) and institute a country-by-country calculation
  • Elimination of the foreign derived intangible income (FDII) deduction
  • Tightening of anti-inversion rules making it harder for U.S. corporations to invert
  • Disallow certain expense deductions for companies offshoring jobs and provide credits to support onshoring jobs
  • Enact a new rule disallowing profit-stripping deductions for payments made to foreign corporations if the foreign corporation is “based in a country that does not adopt a strong minimum tax.” This proposal may signal a possible repeal of the base erosion and anti-abuse tax (BEAT) as the fact sheet states that this proposal will replace “an ineffective provision in the 2017 tax law that tried to stop foreign corporations from stripping profits out of the United States.”
  • Eliminate tax preferences for fossil fuels

The plan also indicates that additional proposals relating to individual taxation will be forthcoming. 

We anticipate that additional detail on the proposed tax increases will be included in the President’s FY 2022 budget plan. Companies should begin evaluating the American Jobs Plan and the Made in America Tax Plan and consider modeling the potential tax impact of these proposals.

Contact your tax advisor or a member of our international tax team for additional information or assistance modeling the potential impact for your specific situation.

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