It has been a busy couple of months for President Biden since taking over as President of the United States. President Biden has already passed the $1.9 trillion American Rescue Plan Act back in early March, and now he has proposed a new bill to Congress in an effort to improve the Unites States infrastructure. On March 31, the Biden administration announced their proposal for a $2.2 trillion infrastructure bill called the American Jobs Plan. The purpose of the American Jobs Plan is to “create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China."1
If passed by Congress the American Jobs Plan will offer an expansive sweep of some of America’s most significant infrastructure systems including transportation, manufacturing, community resources and more. Continue reading as we have outlined some of the major components of this proposed bill and how it may impact your taxes.
The American Jobs Plan Overview
While this is not a comprehensive list, here is an overview of the American Jobs Plan and some of it's major components.
The American Jobs Plan would offer $621 billion in an effort to make significant improvements and repairs to roadways, ports, transit systems, bridges and airports.
According to the fact sheet released by the White House, infrastructure slated to receive upgrades include:1
- 20,000 miles of highway and roads
- 10 major bridges with economic significance
- 10,000 minor bridges that link communities together
- Thousands of buses and rail cars
According to the proposed legislation, $115 billion will go towards improving bridges, roads, and highways in need of repairs. $20 billion will go towards improving road safety in an effort to reduce the number of crashes and fatalities. The legislation also proposes $85 billion to improve the public transit system and like mentioned above upgrade buses and rail cars.
Under this new legislation, the Biden administration also aims to “deliver clean drinking water, a renewed electric grid and high-speed broadband to all Americans.”1
As a part 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
To remove all lead pipes and service lines, the Biden administration has proposed, for Congress to invest $45 billion in the Environmental Protection Agency's Drinking Water State Revolving Fund and into the Water Infrastructure Improvements for the Nation Act (WIIN) in order to achieve this. According to the fact sheet, between six to ten million homes are still receiving their drinking water through these lead pipes and service lines.
Workforce & Manufacturing Infrastructure
The American Jobs Plan aims to secure U.S. supply chains while revitalizing the manufacturing industry at home. As a part of the proposed legislation, this bill puts a focus on upgrading the country’s research infrastructure and training a new generation of American workers for future technologies.
According to the proposal, 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
The American Jobs Plan puts a focus on home care workers, especially considering COVID-19. This portion of the 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 any major legislative proposal, there is always the question of: who will be paying for these upgrades and improvements? The Biden administration has announced that, the American Jobs Plan is expected to be funded primarily through corporate taxes, with an expectation that the eight-year plan would pay for itself in 15 years.1
The Biden administration has also 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
Although there have been multiple discussions about placing new taxes individuals, as of right now, there is no proposal by the Biden administration to do so. However, this could potentially change as the Biden administration is still discussing possible proposals.
For example, one proposal that may get introduced suggests raising taxes on families with an annual income of $400,000 or more. While 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
Like mentioned above, at this point, it's uncertain what or if any - tax changes for individuals will be taken up by Congress. The initiatives that will take priority may become clearer in the coming weeks.
Challenge yourself to be patient during this period of debate over tax proposals. Although it can be stressful to hear your taxes may be on the rise, it is still 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 business, or if any have questions, feel free to reach out to one of our financial advisors to further discuss your concerns.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.