April 7, 2021
The Treasury Department on Wednesday released a report that argues why the tax portion of President Joe Biden’s American Jobs Plan should be enacted into law.
“[T]his tax plan would generate new funding to pay for a sustained increase in investments in infrastructure, research, and support for manufacturing, fully paying for the investments in the American Jobs Plan,” the report states.
The president’s American Jobs Plan is projected to cost $2.5 trillion by upgrading and repairing the country’s physical infrastructure, promoting the production of clean energy, and expanding health care services.
These programs would be in effect for eight years and they would be paid for over 15 years by the tax portion of the plan, which is called The Made in America Tax Plan and largely calls for tax increases on U.S. multinational corporations.
The Treasury’s overall argument for enacting these tax increases is that they will require corporations to pay their fair share. It states that the U.S. currently raises less corporate tax revenue, as a share of GDP, than at any time since World War II.
“In fact, U.S Multinational corporations’ effective tax rate—the share of profits that they actually pay in federal income taxes—is just 8 percent,” the report states.
It makes the following arguments regarding why certain tax increases in the plan should become law:
The tax portion of Biden’s plan has been met with opposition from lawmakers and high-powered interest groups.
Senator Joe Manchin (D-W.Va.), a possible linchpin in getting the plan through Congress, opposes the increase in the corporate income tax rate from 21% to 28%. He favors a rate no higher than 25%.
House Ways and Means Ranking Member Kevin Brady (R-Texas) claims the president’s plan would make U.S.-based companies less competitive to foreign companies.
The U.S. Chamber of Commerce deemed the tax plan "dangerously misguided."
Business Roundtable CEO Joshua Bolten said the tax increases would create “new barriers to job creation and economic growth.”
Senator Chris Coons (D-Del.) on Wednesday suggested that the plan should not be paid for and scaled back.
“In the choice between raising taxes significantly, and simply looking at each other and saying, ‘We need a robust recovery,’ I think it's more likely that we will have a package that is not paid for, and that is less robust but still putting hundreds of billions of dollars into infrastructure,” the Senator told Punchbowl News.
President Biden has repeatedly said that he is open to changing the tax proposals in the plan. However, the plan must be paid for so it won't add to the deficit. This means that those opposing these tax increase must suggest other tax increases.
“We gotta pay for it,” said President Biden on Wednesday when speaking to the press.
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