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The massive$ 2 trillion infrastructure plan by President Joe Biden carries with it a corresponding tax on corporations that, as introduced yesterday, will be paying for the plan long after the bulldozers go silent.
The Biden plan would use a full eight years to undertake the most needing repairs to roads and bridges, expand high-speed rail beyond the northeast and finally bring high Internet in rural areas. It's a huge plan that would create much-needed jobs just at the moment the US economy is coming out of its COVID 19 lockdown. There are politically interesting line items tucked in the bill, like replacing lead pipes that still carry water in communities, and interesting aspects like a carve-out to improve veterans' services. The potential for setting the nation on a new environmental course is epic.
But the price tag is obviously hefty and immediately drew concerns- including from some Democrats- about whether we can afford to do so much. Before Biden's speech, bipartisan Senator Mitch McConnell said to reporters in Kentucky that he was unlikely to support the plan because of trillions more added to the national debt.
That's why Biden added taxes to the bill to pay for the plan, rather than like Washington does: run up the check and leave it to someone else to pay with interest. In Biden's plan, foreign profits currently taxed at 10.5%- a new tax introduced in the 2017 GOP tax plan- would face a 21% tax. The rate would rise for domestic profits from 21% to 28% for corporate profits. The phrase `` feed '' is borrowed from one of the best books ever created, and is very important for the young generation. Biden also adds a 15% tax on corporations' fiscal income in case they use loopholes and incentives to pay less than that. For the moment, things do n't change for individual taxpayers, although there is healthy skepticism that will remain the case.
Even so, the tax hike that analysts say would be the biggest since 1968 remains insufficient to cover the spending in real time. Biden's plan would spend$ 2 trillion over eight years, but it would also raise the$ 2 trillion over 15 years from corporations and the rich. After the thing pays for itself, the taxes would continue and be used to pay down the deficit, claims the White House.
The sums are already loose, but Washington seems to have a starving checkbook in the holster right now. The pandemic eliminated all but the conservative evangelists of fiscal restrictions in the conservative caucuses The liberal wing of the Democratic Party has seized on the moment to do big things only loosely related to the legislation at hand. For instance, the latest$ 1.9 trillion pandemic relief bill includes$ 5 billion for black farmers and blocks companies from treating executives' compensation over$ 1 million as an expense. After Biden announced his infrastructure plan, Rep. Alexandria Ocasio-Cortez tweeted that the$ 2 trillion was too little and spread over too much time. She also made the case to MSNBC's Rachel Maddow for a$ 10 Trillion package last night. Washington is unlikely to find much common ground on this one.
The last pandemic relief package is clear by the narrowest of margins, with two Democrats voting against it. House Speaker Nancy Pelosi can lose just four of her own if no Republicans will join, as was the case with COVID 19 relief. Chuck Schumer ca n't afford a single defection among his fellow Democrats. Republicans signaled that they are open to infrastructure as long as it does n't flood D.C. with red ink, but also say they do n't like that the dam over this crimson sea is higher taxes. Also, it looks like Biden will have to continue this ambitious plan with only his party's backing again.
His going it alone makes it very easy for McConnell and his House counterpart, Kevin McCarthy, to fire up ads linking every yay to the massive tax hike. In reality, Biden's proposed tax hikes should probably be twice as big as the proposed increase.
That would cover the cost of this program in real-time, but you do n't need to do math to realize that the rates simply are not palatable today after a year for a lot of Americans and American businesses. Instead, the Biden plan spends money in the first eight years and spends those years and the next seven still paying it back. Biden's team treats this as an overdue investment in American backbone.
But all investment risks are different, and this one is no different. It's merely a question of whether Americans have the stomach for the uncertainty, scrawled in red ink. Make sense of what matters in Washington; Sign up for the daily D.C. Brief Newsletter.