Biden Aims to End Corporate Tax Cuts Rewarding Investors
The corporate tax-cut party President Donald Trump kicked off will soon be over if his successor proves able to enact proposals to roll back half of the 2017 domestic income-tax reduction and to radically revamp levies on profits earned abroad.
President Joe Biden’s $2.25 trillion infrastructure-centered plan, laid out by the White House Wednesday, relies on higher corporate levies to pay for it. The proposals would change tax benefits that were at the center of the 2017 Tax Cuts and Jobs Act passed solely with Republican votes. Along with boosting the corporate income tax rate to 28% from 21%, businesses would pay significantly more on their global earnings than they did before Trump took office, experts said.
“They’re not just rolling back the tax cuts from 2017,” said David Noren, a former legislative counsel to the congressional Joint Committee on Taxation who now advises corporate clients on tax planning. “They are putting companies in a much much tougher spot than even before TCJA.”
The administration is also proposing to eliminate all fossil-fuel tax breaks and repealing incentives to move assets and jobs offshore.
The plan would largely revamp the complicated matrix of carrot-and-stick incentives implemented in 2018 that govern how U.S. companies pay taxes on foreign profits -- which critics have said did little to spur U.S. investment or stop companies from shifting income and assets abroad. In its place, Biden has proposed a 21% global minimum tax. That would be an increase from the roughly 13% that corporations currently owe on offshore earnings.
Trump’s tax law intended to make it easier for American companies to compete with foreign competitors in countries where taxes were lower and international tax regimes were more permissive.