WASHINGTON—President Biden is calling for $2 trillion in corporate tax increases over 15 years to pay for his infrastructure plan. Here are the basics of the revenue-raising side of the plan, which reverses many of the changes from the 2017 tax law written and passed by Republicans.
The proposals released on Wednesday hew closely to Mr. Biden’s campaign tax plan. But they don’t include his proposals affecting taxes on high-income individuals’ income, capital gains, estates and noncorporate businesses. Those are expected in a future segment of the president’s agenda.
How big is the tax increase?
Not counting the Biden plan, corporate taxes are projected to be 1.3% of gross domestic product over the next decade, according to the Congressional Budget Office. This plan would add 0.5 percentage points of GDP, according to the administration.
What happens to the corporate tax rate?
It would go up to 28% from 21%. That’s still lower than the 35% that existed before the 2017 law, but it would put the U.S. back toward the top of the pack among major economies.
Why does the corporate tax matter?
Higher tax rates reduce the return on investment, so business groups say companies might be less likely to build factories or make other investments in the U.S. Some projects that make sense at a 21% tax rate won’t make sense at a 28% rate.