On March 31, 2021, President Biden’s administration proposed the “American Jobs Plan” to create domestic jobs, rebuild national infrastructure and increase American competitiveness. To fund its expected $2 trillion price-tag, the administration also proposed the “Made in America Tax Plan,” which is intended to raise that amount or more over 15 years through a mix of incentives for domestic spending, renewed tightening of offshore profit shifting and higher income tax rates on corporations. The plan reverses or modifies several important provisions enacted in the 2017 Tax Cuts and Jobs Act (TCJA) and focuses primarily on corporate income taxes. This plan includes no individual income, capital gain or estate tax hike proposals, although it hints at them. President Biden has pledged not to increases taxes on individuals earning less than $400,000.
Billed as a “generational opportunity to fundamentally shift how countries around the world tax corporations,” the plan includes many of the corporate income tax proposals released by President Biden’s campaign late in 2020. The plan is ambitious and includes the following:
President Biden hopes to garner bipartisan support for the plan, but that may be difficult. It is possible for the legislation to pass the Senate with a majority vote (rather than 60 percent vote) if the Democrats use the budget reconciliation process or eliminate the Senate filibuster. Other difficulties surely lie ahead. For example, certain Democratic senators object to any plan that does not reinstate the deduction for state and local taxes paid by individuals, and some of the international provisions need to be coordinated with ongoing efforts by the Organization for Economic Co-operation and Development (OECD) to develop international standards for taxing global income of multinational enterprises.