WASHINGTON – President Biden’s corporate tax plan would tear down much of the structure Republicans put in their tax bill less than four years ago, raise tax rates on large U.S. corporations, and raise taxes on their overseas profits.
Mr. Biden’s plan would generate approximately $ 2 trillion over 15 years to pay for the infrastructure expenses he outlined on Wednesday. This would raise the corporate tax rate from 21% to 28%, increase minimum taxes on foreign income for US companies, and make it more difficult for foreign-owned companies with US operations to benefit from shifting profits to low-tax countries.
Republican law of 2017 aimed to reduce the U.S. corporate tax burden to make it similar to other countries’ systems. In contrast, the Biden Plan depends in part on the ability of the Democratic government to get other countries to adopt similar tax regimes so that US corporate headquarters does not become a significant competitive disadvantage.
In response to complaints that some companies are finding legal ways to pay little or no taxes, Mr Biden would also add a minimum tax of 15% on large companies’ financial results. This would create a secondary tax base with different income definitions to replace all other provisions.
The government says its plan shouldn’t be viewed in isolation but as part of a global project to prevent companies from evading corporate taxes. If other countries introduce similar minimum taxes – an effort that is underway but far from being completed – US corporations would be much more equitable.