Articles

Biden Unveils Tax Proposal to Pay for New Jobs Plan by Timothy Larson, CPA


Posted on May 20, 2021 by Timothy Larson

At the center of President Biden’s plan to rebuild the country’s infrastructure, create jobs and increase production of clean energy is a proposal to raise $2.3 trillion over 15 years, in large part, by increasing the corporate tax rate and reforming the international tax system.

According to the administration, the Tax Cuts and Jobs Act (TCJA) signed into law by former-President Trump in 2017, “only made an unfair system worse” by providing corporations with new incentives to shift plants, profits, and jobs overseas. To help rectify this situation and pay for The American Jobs Plan while reducing the federal deficit, the administration unveiled the Made in America Tax Plan, which includes the following proposed provisions:

As part of this plan, the president has committed to work with other countries and establish a global minimum tax rate that ensures no one country has a substantial tax advantage over another. Separately, the administration introduced a series of corporate tax credits to reward those businesses that reduce carbon emission, produce and invest in clean energy, and expand infrastructure services, such as affordable housing, in underserved communities.

Whether any of the administration’s proposals under the American Jobs Act or the Made in America Tax Plan will receive congressional approval and be enacted into law is unknown. Yet, with the clarity of details provided by the administration’s reform priorities, U.S. multinational corporations and foreign-based businesses can and should use this time now to review their existing structures and assess their options for maintaining profitability, productivity and tax efficiency under a potential new regime. Working with experienced tax advisors and CPAs, companies can begin modeling the impact of the administration’s proposals – whether in full or in part – and begin considering a variety of tax-planning strategies to minimize the final impact under any congressional-approved reforms.

About the Author: Timothy Larson, CPA, is a director of Tax Services with Berkowitz Pollack Brant CPAs and advisors, where he works with privately-owned businesses, multinational entities and individuals on a wide variety of cross-border tax issues. He can be reached at the firm’s New York office at (646) 213-7600 or via email at info@bpbcpa.com.