Biden’s tax plan recoups $2 trillion in overseas corporate profits: Treasury

US President Joe Biden receives an economic briefing with Treasury Secretary Janet Yellen in the Oval Office of the White House in Washington, January 29, 2021.

Kevin Lamarque | Reuters

treasury secretary Janet Yellen on Wednesday touted the Biden administration’s proposed changes to the corporate tax code and said in detail that the plan would be fairer, reduce incentives for companies to move factories and revenue overseas and generate revenue for national priorities.

Treasury officials said the Made In America tax plan, tied to the president Joe BidenThe $2 trillion infrastructure overhaul would recoup about $2 trillion in profits in the United States currently being generated overseas.

Estimates calculated by the Treasury Department and the Joint Committee on Taxation revealed that setting incentives for offshore activities could generate an amount of revenue equal to $700 billion.

Taken together, the Made In America reforms are expected to generate about $2.5 trillion over 15 years to pay for eight years of spending on roads, bridges, transit, broadband and other projects. .

Biden spoke about his administration’s plan Wednesday afternoon from the Eisenhower Executive Office Building in Washington.

“It’s not a plan that tinkers around the edges. It’s an investment unique to America, unlike anything we’ve done since we built the interstate highway system and won the space race. decades ago,” Biden said.

“It’s a plan that puts millions of Americans to work fixing what’s broken in our country: tens of thousands of miles of roads and highways, thousands of bridges in desperate need of repair. It is also a necessary infrastructure plan for tomorrow,” he said. added.

The 17-page Treasury report will likely serve as a blueprint for lawmakers looking to guide one of the biggest spending and taxing proposals through Congress in 2021.

Key provisions of the plan include increasing the U.S. corporate tax rate to 28% from 21% and imposing minimum taxes on foreign income as well as domestic income that companies report to shareholders, who are expected to all increase the US corporate tax bill.

“The largest and most profitable American companies face lower tax rates than ordinary Americans,” Treasury officials said in a presentation released Wednesday. “The Made in America Tax Plan would reverse these trends. … The plan would eliminate biases in current tax law that favor offshoring of economic activity and would largely end the shifting of corporate profits with a country-by-country minimum tax .”

Biden said Wednesday he would be willing to raise the corporate rate by a lesser amount and is unmarried at 28%.

Business groups oppose the changes, saying they would hurt investment and the ability of U.S. businesses to compete for global trade. The Treasury report argues that the 2017 tax cuts went too far and generated little economic benefit, pointing out that foreign investors received a significant share of the gains.

The White House proposal would also hit major elements of Trump’s 2017 corporate tax cuts, including base erosion and the anti-abuse tax, known as “BEAT.” Although the BEAT was designed to punish companies that transfer profits offshore, it has been criticized for taxing certain non-abusive transfers and missing out on those that use tax avoidance strategies.

The president’s proposed 15% minimum tax on book corporate income, aimed at those reporting large profits to investors but low tax payments, would only apply to companies with profits over $2 billion. from the current level of $100 million.

According to Treasury Department calculations, this could impact about 45 corporations, with the average taxable business seeing an increase in minimum tax liability of about $300 million each year.

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