US President Joe Biden (file photo) Photograph:( AFP )
Biden had pledged that his long-term economic agenda would not add further to the growing national debt
President Joe Biden intends to pay for the $2 trillion package of infrastructure spending he will propose on Wednesday with a substantial increase in corporate taxes, people briefed on the plan said Tuesday.
The scale of the infrastructure program — one of the most ambitious attempts in generations to shore up the nation’s aging roads, bridges, rail lines and utilities — is so big that it will require 15 years of higher taxes on corporations to pay for eight years of spending, they said.
Despite his ambitious programs, Biden had pledged that his long-term economic agenda would not add further to the growing national debt. But the fact that his proposed tax increases would not cover his spending over the same period shows the challenge he has in balancing his big goals and the deficit.
Biden’s proposals include raising the corporate tax rate to 28% from 21% and efforts to force multinational corporations to pay significantly more in tax to the United States on profits they earn and book overseas. The corporate tax rate had been cut under President Donald Trump from 35% to 21%.
Biden’s infrastructure plan is the first step in a two-part agenda to overhaul American capitalism, fight climate change and attempt to improve economic productivity. Together, those two proposals could cost as much as $4 trillion between spending increases and tax incentives.
The spending in the first phase of Biden’s plan includes a wide range of investments in physical infrastructure, including highways, mass transit and electric vehicle charging systems and upgrades to water pipes, the electric grid and veterans’ hospitals. It also includes a big increase in federal research and development spending and efforts to provide home-based care to older and disabled Americans.
The second step, which officials have suggested will come next month, will feature spending and tax credits meant to invest in what liberal economists call human infrastructure. It will include aid to the poor, paid leave for workers, and measures meant to reduce the cost of child care and help women work and earn more.
Proposals to pay for that second step include tax increases on high-earning individuals and the wealthy, like an increase in the top marginal income tax rate to 39.6% from 37%.