On March 31, the Biden administration announced their proposal for a $2.2 trillion infrastructure bill called the American Jobs Plan. According to the official fact sheet, the American Jobs Plan aims to “create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China.”1 This potential legislation would impact some of America’s most critical infrastructure systems including manufacturing, community resources, transportation and more. Below is an overview of some of the major components of this proposed legislation and perhaps most importantly, how your taxes could be affected.
The American Jobs Plan Overview
While this is not an exhaustive list, here are some major elements of the American Jobs Plan.
As a part of this legislation, the Biden administration aims to “deliver clean drinking water, a renewed electric grid and high-speed broadband to all Americans.”1 With a goal of restoring and improving communities through their infrastructure, this bill would aim to:
- Remove all lead pipes & service lines in drinking water systems
- Create 100,000+ jobs in laying transmission lines & capping orphaned oil and gas wells or abandoned mines
- Build, preserve or retrofit 2 million+ homes and commercial buildings
- Upgrade veterans’ hospitals
Workforce & Manufacturing Infrastructure
The proposed legislation seeks to secure U.S. supply chains while simultaneously revitalizing the manufacturing industry at home. As a part of the American Jobs Plan, this bill puts a focus on upgrading the United State’s research infrastructure and training a new generation of American workers for future technologies. This bill includes:1
- $50 billion invested in the National Science Foundation (NSF)
- $30 billion for research and development, with a focus on job creation in rural areas
- $40 billion in upgrading research facilities
- $35 billion towards addressing the climate crisis and developing clean energy
- $30 billion in jobs and research focused on preventing future pandemics
Transportation Infrastructure The proposed legislation would offer $621 billion in important upgrades and repairs to roadways, ports, transit systems, bridges and airports. For example, infrastructure slated to receive upgrades include:1
- 10,000 minor bridges that connect communities
- Thousands of rail cars and buses
- 20,000 miles of highway and roads
- 10 major bridges with economic significance
The American Jobs Plan places a priority of home care providers, especially with the backdrop of the Coronavirus pandemic. This facet of President Biden’s plan promises to create new, more desirable job opportunities for caregiving workers. It’s the administration’s goal to offer home- and community-based care for those who need it, but would otherwise have to wait years to receive it.
Will Your Taxes Be Raised?
With a major legislative proposal, the question arises: who will be paying for these changes? The American Jobs Plan takes aim at Corporate America, as it is largely expected to be funded through corporate tax increases. Projections claim that the eight-year plan would pay for itself in 15 years.1
The Biden administration has started to outline possible tax changes, including:1
- Raising corporate taxes from 21 percent to 28 percent
- Cracking down on companies that use overseas operations to manage profits
- Eliminating tax breaks for some industries
Currently, there is no proposal by the Biden administration to place new taxes on individuals. There have been whispers in the press about how an increase of federal taxes on individuals could be sold to the public but so far, nothing official has been shared. One proposal that may get introduced, for example, suggests raising taxes on families with an annual income of $400,000 or more. Others have proposed a higher capital gains tax rate for individuals earning $1 million a year or more, as well as adjustments to the estate tax exemption.2 At this point, it’s uncertain what – if any – tax changes for individuals will be taken up by Congress. The initiatives that will take priority may become more clear in the weeks ahead. Even with collaborative and compliant legislative branch, it is still challenging for Presidents to implement multiple, large policy enactments. A $2 trillion + infrastructure plan coupled with individual tax increases could prove to be a tough pill for lawmakers to swallow with 2022 midterms in the offing. It can be frustrating to learn your taxes may be on the rise, but it’s too early in the process to know what changes may actually occur. If you’re concerned about the American Jobs Plan and its potential impact on you or your job, your business, or your retirement plan reach out to me to discuss your concerns.