President Biden's Proposed Infrastructure Plan Includes Business Tax Provisions to Incentivize Infrastructure Investments and Fund the Plan

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On Wednesday, March 31st, President Biden released a summary of his administration’s proposed The American Jobs Plan (the “TAJP”). TAJP is a $2 trillion proposal focusing on public domestic infrastructure investments. To help incentivize infrastructure investments and fund the proposals, the TAJP summary includes the following tax related provisions:
  • Increasing the corporate tax rate to 28 percent (from 21 percent currently),
  • Changing how U.S. corporations are taxed on international operations including increasing the minimum tax on U.S. corporations to 21 percent and calculating it on a country-by-country basis, eliminate the exemption of a 10 percent return on tangible investment abroad (QBAI) and making it harder for U.S. corporations to “invert”,
  • Adding a 15 percent minimum tax on the income corporations use to report their profits to investors—known as “book income”,
  • Increasing audits of large corporations,
  • Adding a new tax credit to provide incentives to low- and middle-income families and to small businesses to invest in disaster resilience,
  • Creating a targeted investment tax credit that incentivizes the buildout of at least 20 gigawatts of high-voltage capacity power lines,
  • Proposing a ten-year extension and phase down of an expanded direct-pay investment tax credit and production tax credit for clean energy generation and storage, and
  • Proposing an expanded tax credit to encourage businesses to build childcare facilities at places of work.
In addition, although not in the summary there has also been discussion about increasing the highest tax rate on individuals back to 39.6% (from 37% currently). No details have been provided regarding any of these proposals, and it is uncertain whether any will be enacted into law and if so, in what form.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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