Joe Biden is proposing to plough $2 trillion (€1.7 trillion) in government spending into US infrastructure alongside $2 trillion in higher corporate taxes, in the first stage of a multitrillion-dollar effort to reshape the world's largest economy.
Mr Biden wants to raise the corporate tax rate from 21 per cent to 28 per cent, and muster additional revenue through a 21 per cent global minimum tax, calculated on a country-by-country basis "so it hits profits in tax havens", according to the White House. The president also wants to scrap an exemption from taxes for companies on the first 10 per cent of earnings produced internationally and end tax preferences for fossil fuel producers.
The White House released details of the plan ahead of a speech by the US president in Pittsburgh on Wednesday, with administration officials calling it the biggest public investment programme since the creation of the interstate highway system and the Space Race of the 1960s.
Coming just weeks after Congress approved a $1.9 trillion fiscal stimulus plan to reboot the pandemic-ravaged US economy, Biden's investment proposal will set the stage for weeks of delicate negotiations on Capitol Hill, where Democrats hold razor-thin majorities in both chambers.
If passed, it would represent a high-stakes bet by the White House that a lasting injection of government funds in critical areas, funded by higher corporate taxes, will strengthen the economy as it emerges from the coronavirus crisis, rather than weaken it as Republicans are already charging.
One Biden administration official said the plan was an “important moment to demonstrate that the United States and democracies can deliver for the people”, arguing that it would “revitalise our national imagination” and put “millions of Americans to work right now”.
The plan sets aside up to $621 billion in funding for traditional infrastructure upgrades, including roads, bridges, public transportation networks and vital hubs such as ports and airports.
But it will also try to direct the spending towards projects to help the US mitigate the climate crisis, which the Biden administration has vowed to tackle head-on, in a big shift from the scepticism of former president Donald Trump.
Even before Mr Biden released his plan, the Business Roundtable, which represents the biggest blue-chip companies in Washington, attacked the tax increases element.
"Business Roundtable strongly opposes corporate tax increases as a pay-for for infrastructure investment. Policymakers should avoid creating new barriers to job creation and economic growth, particularly during the recovery," said Joshua Bolten, former White House chief of staff under George W Bush and the Business Roundtable president. – Copyright The Financial Times Limited 2021