President Joe Biden calls his American Jobs Plan a once-in-a-generation investment in the future and America’s ability to retain global leadership just as past bold, visionary infrastructure investments have done – the transcontinental railroad, the national highway system, the Space Race, the Internet.
Significantly, the $2 trillion plan is an amount that would be spent over the next eight to 10 years, not all at once, like the $2 trillion CARES Act or the $1.9 trillion American Rescue Plan.
Biden has presented a cogent approach to paying for the plan – unlike Republicans with the 2017 Trump tax scam, which cost the Treasury $2 trillion, 83 percent of which went directly to the pockets of the wealthiest 1 percent and biggest corporations. Indeed, 55 of the Fortune 500 companies paid zero tax on 2020 profits, while some profitable companies even get huge taxpayer-funded rebates. With all the loopholes in the tax code, the average rate corporations pay is a mere 8 percent. As Biden pointed out, a fireman and a nurse with two children pay more in tax, at 22 percent of their income, than these billion-dollar companies that pay zero.
Indeed, corporate taxes account for 7 percent of federal tax revenue; in 1952, the corporate share was 32 percent. Raising the corporate rate to 28 percent from 21 percent (still lower than 35 percent) and imposing a 15 percent minimum tax on companies earning $2 billion or more would raise $1 trillion over 15 years.
Taxpayers are still paying $40 billion in subsidies to Big Oil, funds that should instead go toward incentivizing entrepreneurs developing clean, renewable energy.
The Trump tax plan continued to incentivize off-shoring jobs and profits to avoid tax, but Biden would end those incentives while incentivizing job-generating investments at home.
Biden would impose a 21 percent minimum tax for multinational corporations that have exploited (and created) loopholes for tax avoidance, while creating a global “race to the bottom” for countries like Ireland and the Cayman Islands to entice companies to set up post boxes there. Treasury Secretary Janet Yellen is calling for a global minimum tax rate (good luck with that).
And why shouldn’t Big Business pay their fair share of taxes? Big Business is the biggest beneficiary of infrastructure gains, including the new industries, improved transportation, universal access to broadband, cheaper Internet, improved public education, access to college, as well as access to affordable child care (the grease to the workforce gears). Additionally, the plan calls for substantial, meaningful investment in R&D so that the United States won’t be left in China’s proverbial dust.
Biden would also restore the top tax rate of 39.6 percent on the wealthiest individuals – pledging that no one earning less than $400,000 will see an increase. That seems fair since income inequality has only been exacerbated since the 2017 tax cuts and especially during the coronavirus pandemic, which produced a one-third increase in the number of billionaires to 2,755 in just this year.
Billionaires’ wealth expanded from $8 trillion to $13 trillion; the top 1 percent, who own 35 percent of the wealth created, average $30 million in net worth, compared to the bottom half of all Americans, with 4 percent of the wealth created, who average $36,000 in net worth, according to New York Times columnist Steve Rattner.
Biden, pledging to reward “work not wealth,” would also raise the capital gains tax for households with $1 million or more income, from the low of 20 percent to the top rate for income, which Biden wants to restore to 39.6 percent.
Biden would also raise estate and inheritance taxes, which Republican administrations have cut, raising the threshold from $5.45 million to $11.4 million before estate taxes kicked in. Instead, Biden would lower the threshold to $3.5 million and raise the estate tax rate from 40 percent to 45 percent.
“Wealth/income inequality is bad for society the economy and human rights,” Rattner remarked on MSNBC. “[Progressive as opposed to regressive] tax policy should work to rebalance [inequality].” Income inequality, he said, is the “lit fuse of social combustion.”
Meanwhile, Biden seems open to ending the cap on SALT (State and Local Taxes), which the Trump tax scam used to reduce the deficit to afford cutting taxes for the wealthiest, while specifically penalizing Blue states like New York and California where state and local taxes on average exceed the $10,000 cap. (The states have fought it as unconstitutional double taxation, and some congressional members, including Tom Suozzi, have said they would not back Biden’s proposal without eliminating the SALT cap.)
Other ways this about-time investment in America’s Build Back Better infrastructure will be paid for:
19 million more well-paying jobs (Biden proposes a Made in America purchasing program) increase federal revenue while reducing spending on social programs (food stamps, etc.) and improves productivity.
Increasing IRS enforcement ($1.4 TRILLION outstanding), Biden said, “would raise tens of billions of dollars. It adds up to more than what I proposed in just 15 years. It’s honest. It’s fair. It’s fiscally responsible. And it pays for what we need and reduces the debt over the long haul.”
Cut military spending (where is that peace dividend we were supposed to get?) – the next war will be fought in cyberspace, not via war planes, ships or tanks.
There is also the cost-benefit analysis that needs to be considered: If this country doesn’t spend the money, it will pay out far more in health care, lost productivity (and premature death), climate disasters that are draining the treasury of $100 billion a year, and the cost of being left back in the global marketplace as other countries forge ahead. Americans invented the Internet but China could very well replace it with an entirely new system.
Infrastructure represents investments in the future, not one-time Band-aids of relief after a catastrophe –every $1 spent has a return on investment of $1.50.
Biden has been clear that he is open to other ideas and to compromise and, unlike Trump, he has invited Republicans to the Oval Office to discuss other proposals.
“We’ll be open to good ideas and good-faith negotiations. But here’s what we won’t be open to: We will not be open to doing nothing. Inaction simply is not an option.”
