President Biden’s “Build Bank Better Plan” for infrastructure has morphed into “The American Jobs Plan,” a fact sheet for which was released on March 31, 2021.
Many of the details of The American Jobs Plan remain to be developed, including funding mechanisms and the role of the private sector. The Plan contains a section entitled “The Made in America Tax Plan” that provides an outline as to how the Plan is proposed to be financed, including (i) increasing the corporate tax rate from 21% to 28%, (ii) modifying the global minimum tax for U.S. multinational corporations, (iii) strengthening provisions making it more difficult for corporations to avoid U.S. taxes by claiming to be a foreign company, (iv) modifying provisions that allow expense deductions from off-shoring jobs and that provide incentives for shifting assets abroad, (v) enacting a minimum tax on the book income of large corporations, (vi) eliminating special preferences for the fossil fuel industry and restoring payments to the Superfund Trust Fund, and (vii) enhancing Internal Revenue Service enforcement. Although not mentioned, but expected by some sources, changes also include an increase in capital gains taxes for affluent Americans and the re-imposition of the individual tax rate of 39.6% for individuals earning more than $400,000 per year.
Battle lines are already forming and the enactment of legislation creating and funding The American Jobs Plan is far from certain. Key elements of the Plan are outlined below.
Continue reading “It’s a Big Deal – The American Jobs Plan”
President Biden’s promised infrastructure legislation, sometimes known by the slogan the “Build Back Better Plan” is still under wraps, but some information is beginning to leak out. According to the New York Times, in an article from March 22, 2021 (updated on March 25, 2021), the total package could be as high as $3 trillion, but would be structured in parts.
One part would address traditional infrastructure projects, such as roads, bridges, rail lines, ports, electric vehicle charging stations, and improvements to the power grid. It is also expected to provide funding for rural broadband and affordable and energy efficient housing units. A key focus would also be on infrastructure related to emerging and high growth industries, such as electrical vehicles, 5G telecommunications and emerging industries. It is expected that that there would be an emphasis on projects that promote the transition to a low carbon / clean energy future.
The second part of the plan would focus on “human infrastructure”. This part is expected to provide funds for education (e.g. free community college and universal kindergarten have been mentioned), skills training and programs that promote broader participation in the job market, as well as tax code modifications for the benefit of workers.
Little specificity has been provided with respect to how the plan is to be paid for, with Transportation Secretary Pete Buttigieg noting at a House Transportation & Infrastructure Committee hearing on March 25,, 2021 that the payment will be through a combination of specific sources such as gas taxes, taxes through the general budget and borrowing. Specific proposals intended to generate revenue, such as, the increase of tax rates and conversion of the gas tax to a “vehicle miles traveled” system have not yet been released.
Proposals have also surfaced suggesting that financing be provided via the use of expanded P-3 structures, the formation of a national infrastructure bank and by bringing back the Build America Bonds that were created as a part of the American Recovery and Reinvestment Act in 2009 to help create jobs and stimulate the economy. The program expired in 2010. The bonds were taxable municipal bonds that came with federal tax credits or subsidies for bondholders or state and local government bond issuers.
While waiting for the reveal of a national program, a number of “mode-specific” bills have already been introduced. For example, one bill would create a Passenger Rail Trust Fund that would provide $5.4 billion annually in grants to Amtrak for, among other things, repairs and fleet modernization. Also, a bill has been introduced for wastewater infrastructure, which would include $40 billion over a five year period for the Clean Water State Revolving Fund, that would provide low-interest loans, loan subsidizations and grants for wastewater infrastructure.
It is expected that President Biden will reveal more details of the Build Back Better Plan in a speech in the very near future, but strategies for trying to obtain congressional approval of the package of legislation implementing the plan remains unclear.
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The American Society of Civil Engineers (ASCE) released its National Infrastructure Report Card on May 3, 2021 and gave the nation’s infrastructure an overall grade of “C-“. This overall grade is up slightly from the 2017 Report Card where ASCE gave the nation’s infrastructure a “D+” grade. The 2021 Report Card indicated that this “is good news and an indication that we’re headed in the right direction, but a lot of work remains”. Continue reading “ASCE Releases 2021 National Infrastructure Report Card”