Biden Infrastructure Funding

President Biden’s infrastructure proposal, called the American Jobs Plan, includes a plan to fix bridges and roads, eliminate lead pipes to secure clean drinking water and make energy-efficient changes designed to combat climate change. Of course, the plan also comes at a price. Biden has proposed increasing the maximum corporate income tax rate from 21% to 28% to provide funding over a 15-year period to accomplish the proposal’s goals.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about raising the corporate tax rate to fund Biden’s proposed infrastructure improvements.

Below is a summary of the debate that ensued between the two professors.

Their Votes:









Bloink











Byrnes



Their Reasons:

Bloink: The infrastructure across this country is crumbling. We need to take action to reinforce our roads, bridges and other public infrastructure. It's also time to take steps to combat climate change by facilitating charging stations for electric vehicles. This has to be paid for in some way and raising the corporate tax rate slightly would both make the tax system as a whole fairer while contributing to the funding we so desperately need.

Byrnes: It’s relatively ironic that this plan is called the American Jobs Plan. Lowering the tax rate from 35% to 21% wasn't designed solely to provide a windfall to big business. It was a step that was carefully considered, from a policy perspective, as a way to allow domestic corporations to remain competitive while keeping their operations stateside, rather than simply fleeing to a lower-tax jurisdiction--and taking their jobs with them. Increasing the income tax rate now would be a step in the wrong direction and jeopardize our economic recovery at a time when we desperately need to encourage job growth in this country.

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Bloink: The largest corporations saw a huge windfall from the 2017 tax reform legislation. Increasing the corporate tax rate from 21% to 28% can provide countless job opportunities as we hire workers to actually complete the work. It’ll also provide the added (and much needed) benefit for every single American: improving the infrastructure for the nation as a whole. And Biden’s infrastructure bill includes rules designed to prevent big corporations from shifting profits to tax haven nations.

Byrnes: Increasing the corporate tax rate at a time when many businesses are still struggling through the pandemic is the opposite of what we should be doing. It won't lead to economic improvement--it'll simply put corporations back in a position of being incentivized to take lucrative projects and jobs abroad.

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Bloink: Pre-reform, the income tax rate for corporations was 35%. While this will increase the tax burden for many big corporations, the increase also represents a compromise. Corporations will still see tax cuts when compared with pre-reform law. And the overall tax liability of most corporations will still be lower, from a percentage standpoint, than the rates paid by most hardworking Americans. It’s time for corporations to accept that they have to step up and pay their fair share.

Byrnes: Even if corporations keep jobs stateside with an increased corporate income tax rate, we have to recognize that there will be consequences for hardworking American workers. Corporations will simply pass along the increased liability in two ways: lower paychecks and increased prices on consumer goods. Changing the corporate tax system solely to increase revenue will be counterproductive and will end up hurting the very Americans who we’re trying to help.