April 12, 2021
President Joe Biden announced a new plan recently that paves the way for the United States to dramatically improve its infrastructure with new bridges, roads, and other improvements. But it also includes tax hikes for companies that, if passed, could change how businesses handle their tax planning.
To be clear, the infrastructure plan hasn’t been passed by Congress nor signed into law. And while there is plenty that can change in the plan before it comes close to being enacted, there are several key considerations that companies of all types should prepare for now.
Read on to learn more about President Biden’s proposed plan and how it may impact companies. And as always, contact Perlson LLP at 516-541-0022 if you have any questions or would like to start your planning ahead of the bill’s possible passing.
How big is the infrastructure plan?
President Biden’s infrastructure plan proposes $2 trillion in additional spending. Most of the spending is split between home infrastructure, like clean drinking water and broadband, as well as transportation infrastructure, such as highways, bridges, and electric vehicles. Workforce development and manufacturing investments are also included in the proposed bill.
President Biden, who said the bill would rank among the most important infrastructure investments in history, said it would translate to 20,000 miles of refurbished roads and improvements to 10 critical national bridges. Lead pipes will also be taken out and renewable energy will become a focal point.
Which industries will be affected — and how much will be spent?
A variety of industries will be impacted by the infrastructure plan President Biden is now floating. Here’s a brief breakdown on what business owners can expect in possible funding from the infrastructure plan:
• Home and community-based care for elderly and disabled people: $400 billion
• Manufacturing and small business: $300 billion, including a significant push to increase the number of skilled workers and apprenticeship programs
• Affordable Housing: $213 billion to rebuild and rehabilitate more than 2 million homes
• Research and development: $180 billion for clean energy investments, with a focus on reducing fossil fuel consumption
• Electric Vehicles: $174 billion provided to state and local governments and the private sector to deploy 500,000 electric vehicle chargers by 2030
• Public schools and community colleges: $137 billion
• Highways, bridges and roads: $115 billion for 10 major and 10,000 smaller bridges, as well as roads and highways across the country
• Clean drinking water: $111 billion, including $45 billion to replace lead pipes and reduce lead exposure in schools across the country
• Workforce development: $100 billion
• High speed broadband: $100 billion to create true universal broadband to the entire country
• Electrical infrastructure: $100 billion
• Public transport: $85 billion to double public transport funding and expand agency capacity
• Passenger and freight rail: $80 billion to repair Amtrak rail
• Infrastructure resilience: $50 billion to fight climate change with a focus on improved electrical grids, food systems, and more
• Airports, water transit: $42 billion
What about taxes?
At $2 trillion, the infrastructure plan President Biden has presented to the U.S. is a significant cost. To offset that cost, the President has proposed tax increases that will repay the spending in 15 years. What’s more, the proposed taxes will become permanent, if passed into law.
According to President Biden’s plan, the proposal includes a tax hike on corporations from 21% to 28%. Additionally, the global minimum tax will jump from 13% to 21%. Federal tax breaks on fossil fuel companies would also come to an end.
The bill also empowers the U.S. government to increase its efforts to stop U.S. corporations from seeking out and using tax havens as their primary residence to reduce their U.S. tax burdens.
Of course, the tax proposal requires negotiation between Congress and the White House, and there are indications from Republicans that they may not accept the President’s tax hikes.
As always, Perlson LLP will keep a close eye on the infrastructure plan’s developments and keep you updated on any changes that may arise.