Biden’s infrastructure plan takes aim at Trump’s biggest economic achievement

Before its changes in 2017, the US had the highest corporate rate among developed countries, and many companies were storing profits overseas to avoid the tax. A growing number of companies relocated their headquarters abroad in so-called inversions to escape the IRS.

But that argument fell flat with many voters, and the Democrats won the public relations battle that pointed to things like a wave of share buybacks on Wall Street.

Biden wants to increase the corporate rate to 28 percent, which the Obama administration had proposed as Vice President. That would make about $ 700 billion.

He would make even more savings with a number of other, arcane tax increases with acronyms like QBAI and FDII, which may not mean much to the average voter, but which will raise alarm bells in corporate tax departments.

Many of these regulations focus on tightening a minimum tax, known among experts as “GILTI,” which Republicans introduced under their 2017 law on US corporations operating abroad.

Biden would double his tax rate, eliminate a special deduction from the levy and, among other things, change the way companies calculate the tax.

Democrats claim that the targeted regulations encourage companies to relocate their operations overseas, although the evidence is barely clear in this regard.

Investments and jobs in the US increased in 2018, the first year the JCT said the Tax Cut and Jobs Act went into effect.

Republicans say the Democrats’ plans will restore many of the problems they were trying to solve, as the US would again have a high corporate tax rate compared to other developed countries.

Under Biden’s plan, companies would have to pay a combined corporate tax of 32.3 percent including government levies, which would be the highest among the developed countries of the Organization for Economic Co-operation and Development. (Excluding the US, the average corporate income tax among OECD countries is 23.4 percent).

“A hasty change in the tax system just to increase revenue will result in inversions and acquisitions of US companies overseas,” said Senator Mike Crapo, Republican chief executive on the finance committee.

The government recognizes the risk of further inversions, but says it can address the problem through regulations while pushing other countries to adopt similar approaches to corporate taxation.

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