On March 31, the Biden Administration unveiled the American Jobs Plan, a package that includes $2.3+ trillion in new spending to strengthen the U.S. infrastructure. The plan has over $500 billion in spending for more traditional infrastructure priorities, such as roads, bridges, and tunnels, and proposes investments in nontraditional programs such as expansion of broadband. The White House described the plan as investing in America’s infrastructure in a way that has not been since the 1950s (interstate highways) and 1960s (space race). One major theme of the plan focuses on the impacts of climate change, an issue Janet Yellen has been publicly stated is an “existential threat” to the nation’s banks.
“These tax changes could have a variety of impacts depending on whether, for example, a bank is a C-Corp or S-Corp, is closely- or widely-held, is part of a family’s larger asset portfolio, desires liquidity at some point in the future, or relies on annual valuations for any reason,” according to Pete Wilder of Godfrey & Kahn, S.C., and these are “potential changes that boards should inform themselves of now in the exercise of their fiduciary obligations.”
Spending on infrastructure and major initiatives:
- $111 billion in water infrastructure
- $100 billion in digital infrastructure, such as broadband access for rural communities
- $100 billion in energy infrastructure
- $213 billion to build and retrofit affordable housing
- $137 billion in early education, K-12, and community colleges
- $28 billion for federal building and veterans’ hospital upgrades
- $400 billion in the care economy for elderly and disabled Americans
- $480 billion in research and development and manufacturing incentives
- $100 billion in workforce training initiatives
To partially pay for the investment in infrastructure, the American Jobs Plan would raise taxes on U.S. companies by an estimated $1.8 trillion over the next decade. This would return the U.S. corporate tax rate to among the highest of major economies. Tax provisions include:
- Set the Corporate Tax Rate at 28%.
- Discourage Offshoring by Strengthening the Global Minimum Tax for U.S. Multinational Corporations.
- End the Race to the Bottom Around the World.
- Prevent U.S. Corporations from Inverting or Claiming Tax Havens as Their Residence.
- Deny Companies Expense Deductions for Offshoring Jobs and Credit Expenses for
- Eliminate a Loophole for Intellectual Property That Encourages Offshoring Jobs and Invest in Effective R&D Incentives.
- Enact a Minimum Tax on Large Corporations’ Book Income.
- Eliminate Tax Preferences for Fossil Fuels and Make Sure Polluting Industries Pay for Environmental Cleanup.
- Ramping Up Enforcement Against Corporations.
The American Bankers Association and Independent Community Bankers of American began reviewing the plan with banker volunteer groups immediately after its release. Multiple sources within leading national trade groups have openly stated that the final form of this bill is unclear given the size and scope of the legislation or whether Democrats would use the budget reconciliation process to pass the bill with a simple majority.
By, Alex Paniagua