Biden Introduces Tax Reform to Raise $ 2.5 Trillion | Economy

President Joe Biden, this Tuesday in Washington.KEVIN LAMARQUE / Reuters

US President Joe Biden on Wednesday revealed details of the fiscal plan that will allow to fund the two trillion dollars in investments of his ambitious infrastructure plan, the second phase of his economic program following the approval of the stimulus package for overcome the pandemic. The plan’s goal is to raise $ 2.5 trillion over the next 15 years by increasing corporate taxes, a minimum rate of 15% on after-tax profits and by encouraging large corporations that pay external taxes to increase their profits. repatriate.

The new taxation of the Joe Biden administration has three pillars. The first is the increase in corporate tax, from the current 21% – the result of Donald Trump’s 2017 tax reform – to 28%, a seven-point percentage increase that remains below the 35% in effect until the presidency. of the republican. The second is to take firm action against companies taxed in other countries with a more favorable tax environment, such as the Bahamas or Ireland; This is the case with many multinationals, including some large technology companies. That is, increase the taxes on your income abroad, while introducing a minimum effective rate of 15% on the after-tax profit listed in the consolidated income statement.

Third, the Biden administration will end subsidies to fossil fuel companies and replace them with incentives for clean energy production, a measure in line with the idea of ​​a sustainable and green economy, which transversely determines its political agenda.

Companies currently taxed abroad will no longer be able to evade US taxes on payments they make to foreign subsidiaries. A Treasury Department report predicts that this will force companies to repatriate $ 2 trillion in profits from overseas over the next decade.

Faced with opposition from big business, all Republicans, and even some Democratic lawmakers, Biden has explained one of his recurring arguments to defend the tax increase: “ why it’s not acceptable for 91 of the country’s 500 largest corporations to pay zero in federal taxes in 2019, “while challenging his critics to indicate” which parts of this package [fiscal] they think they are not worth it ”. Biden announced Wednesday that he will meet with Vice President Kamala Harris in the coming weeks “with Republicans and Democrats” to study the plan, and that he is ready to listen to suggestions from critical lawmakers in “proper negotiations.” As he reiterated his pledge not to impose taxes on Americans who earn less than $ 400,000 a year.

“The debate is welcome; dedication, inevitable and changes [a la propuesta presentada este miércoles]insurance, ”emphasized the president in the tax reform presentation speech. Republicans have until the end of May to table amendments, said Chris Coons, a close associate of Biden in the Senate.

A week ago, while presenting the infrastructure plan in Pittsburgh, Biden immediately named Amazon as one of those 91 companies that have not paid federal taxes for years. Amazon responded immediately, and on Tuesday, founder and CEO, Jeff Bezos, said succinctly that the technology defends “the corporate tariff increase.

According to the latest published survey, the American Employment Plan – the name officially given to the infrastructure plan for its goal of creating millions of jobs while modernizing the country – has the support of 73% of voters, with no ideology distinction (among Republicans 57% support it). But in Congress, where opposition to the plan is fierce, Democrats will have to do their best to convince their political rivals, who criticize him for not spending most of his money on modernizing or building road projects such as roads or bridges. . The president sees spending on modernizing the hydropower network – with special emphasis on remediating lead contamination in many pipes – and ensuring affordable broadband internet access, especially in rural areas, as a top priority.

After Trump’s tax reform in 2017 – the only major legislative initiative of his tenure – federal corporate tax revenues plummeted. If they were equal to 2% of GDP between 2000 and 2017, they fell by half in 2018 and 2019, by 1%, while the countries of the Organization for Economic Co-operation and Development (OECD) averaged between 2.9% and 3.1% in the same years. Meanwhile, after-tax corporate profits have risen against the country’s economy. They went from 5.4% of GDP in the period 1980-2000 to 9.7% between 2005 and 2019.

“There isn’t the slightest evidence to show the cuts [de Trump] in 2017 they increased growth or productivity, “Trade Minister Gina Raimondo said Wednesday,” and the fact is that the current corporate structure is broken. The head of Commerce described the outright rejection of the plan by the Chamber of Commerce, the country’s largest business group, and others as unacceptable. lobbies economic, which he urged to negotiate and debate the White House proposal.

On a podium published in the newspaper today The Wall Street JournalUS Treasury Secretary Janet Yellen has assured that the tax increase plan is “mutually beneficial” to the country and businesses. “Tax reform is not a zero-sum game, with companies on one side and government on the other. There are policies that are mutually beneficial and authentic win winWashington now has one for it, ”Yellen wrote.