Biden’s Corporate Tax Proposal Could Raise Trillions

The Biden administration has unveiled its corporate tax overhaul, intended to raise $2.5 trillion over 15 years to pay for an infrastructure program. “Debate is welcome. Compromise is inevitable. Changes are certain,” President Biden said, but he stressed that “inaction is not an option.”

“America’s corporate tax system has long been broken,” the Treasury secretary Janet Yellen wrote in a Wall Street Journal op-ed coinciding with the plan’s release. In addition to raising the headline corporate tax rate, the administration’s proposal takes aim at companies that shift profits abroad, especially to low-tax havens like Bermuda or Ireland. Some of the changes could be enacted by regulation, but things like raising the corporate tax rate will need the approval of Congress.

What’s in the plan? Here are the main provisions:

  • Raise the corporate tax rate to 28 percent. The increase from 21 percent would put the U.S. more in line with other big countries and, the administration says, lift corporate tax receipts that have fallen to their lowest levels as a share of the economy since World War II.

global minimum tax rate by midyear, but previous efforts have faltered when it came to nailing down the details.

  • Punish companies that headquarter in low-tax countries. A provision in the plan would target “inversions,” where American companies merge with a foreign entity in order to move headquarters to a low-tax country.

  • Replace fossil-fuel tax subsidies with clean-energy incentives. Previous attempts to eliminate subsidies on oil and gas met with stiff industry and congressional opposition.

  • Beef up the I.R.S. The agency’s enforcement budget has fallen by 25 percent over the past decade, and the proposal would bolster the budget for experts in complex corporate litigation.

What effect would it have? A Wharton School budget model concluded that the corporate tax rate increase would “not meaningfully affect the normal return on investment,” but when combined with the proposed minimum tax on book income, business investment would fall somewhat. All told, by 2050 the tax provisions would reduce government debt by more than 11 percent from the current baseline, but also reduce G.D.P. by 0.5 percent over that period.

“I’m actually OK at 28 percent.”

  • “I think there could be bipartisan interest in about half of what the president proposed on the spending side, but of course the corporate tax increases would be a non-starter,” Rohit Kumar, the head of PwC’s Washington tax policy group and a former aide to Senator Mitch McConnell, told DealBook. He’s not convinced there’s even enough support among Democrats for tax increases.

For more on this, see our sister newsletter, The Morning: “Corporate Taxes Are Wealth Taxes

The counting of votes in the Amazon union drive begins soon. The union seeking to represent workers at a warehouse in Alabama said that 3,215 ballots were cast, representing 55 percent of eligible workers. The hand count of the ballots will begin either later today or tomorrow.

Britain curbs the use of AstraZeneca’s vaccine for people under 30. The decision came as regulators increasingly suspect a link between the shot and rare blood clots. While Britain has enough vaccines from other makers to avoid a slowdown in its inoculation efforts, the concerns may dent vaccination efforts in developing countries.

Senator Mitch McConnell walks back his comments on companies and politics, sort of. The minority leader conceded that his criticism of companies for speaking out against voting restrictions was not spoken “artfully.” (Democrats noted that Republicans have benefited from corporate donations.) “They are certainly entitled to be involved in politics,” Mr. McConnell said.

Tencent’s biggest shareholder sells a slice of its holdings for $14.7 billion. Prosus, the Europe-based tech investor, sold 2 percent of its stake in the Chinese tech giant in the biggest-ever block trade (breaking its own record). Prosus still owns a 29 percent stake in the company.

hadn’t told top executives or his board of the arrangement. He is accused of having the gun-rights group file for Chapter 11 to stymie an investigation by New York State’s attorney general.

Many parts of the economy have held up during the pandemic — but corporate real estate isn’t one of them. Landlords and cities are worried that remote working will irreversibly sap demand for office space, The Times’s Peter Eavis and Matthew Haag report.

The numbers are grim for landlords. The national office vacancy rate in city centers has hit 16.4 percent, according to Cushman & Wakefield, a decade-long high. In Manhattan alone, over 17 percent of all office space is available, the most in over 30 years. And rents on existing space could also face pressure from new buildings coming online, representing 124 million square feet.

Some are staying hopeful. Landlords like Boston Properties and SL Green haven’t suffered big financial losses from the pandemic, thanks to many tenants being locked into long leases. They’re also betting many companies want their workers to meet in person to better collaborate and train younger employees.

The final damage won’t be known for some time. Companies are still trying to figure out their real estate needs, based on their work policies: While Amazon expects a return to an “office-centric culture,” JPMorgan Chase’s Jamie Dimon said that the bank may need only 60 seats for every 100 employees after the pandemic.

  • “We are just going to be bleeding lower for the next three to four years to find out what the new level of tenant demand is,” Jonathan Litt, the chief investment officer of Land & Buildings, told The Times.


— Peter Thiel, the tech investor, on how cryptocurrency threatens the U.S. dollar. “China wants to do things to weaken it, so China’s long Bitcoin,” he added.

Florida and Texas banned them. Airlines, universities, event venues and other businesses are also testing various methods of vaccine verification. The starkly different approaches reflect a wider national and global debate on proof of health in the pandemic era.

“There are a lot of ways it could be done badly,” Jay Stanley of the American Civil Liberties Union told DealBook, but he suggested a “narrow path” to a certification system that could work. The ideal system would be paper-based with a digital supplement, Mr. Stanley argues, so that people who lack access to technology aren’t disadvantaged. Encrypted data would be stored on a decentralized network, protected with a public key for vaccine providers and private keys for users to ensure privacy. Fairness also demands a standardized approach, rather than the current variety of systems, which could result in “a mess for civil liberties, equity and privacy,” he said.

The Biden administration has said it won’t mandate vaccine passports, a point it reiterated this week, but it is working on standards the private sector can adopt. New York partnered with IBM on the state’s opt-in Excelsior Pass, which allows access to restricted activities and venues.

The certificates can raise a slew of social and legal issues, depending on who is asking for proof of vaccination and why, according to the Stanford law professor David Studdert. Government mandates trigger more concerns than opt-in programs, he noted, and companies will have different considerations if they seek certification from customers or workers. Given all the variations, he said, “within reason” the market should decide what works, and officials should avoid both mandates and bans: “Different communities and employers have a different tolerance for risk.”

More on vaccine passports:

Deals

Politics and policy

Tech

Best of the rest

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.

View Source

The Tax Filing Deadline Was Delayed to May 17, but Read the Fine Print

“They hear Tax Day is moved to May 17, so a lot of people will go to their preparer on April 30,” Mr. Stewart said. “Unfortunately, the first-quarter estimated payment is late.”

The conference and other groups representing tax professionals had urged the government to postpone the estimated tax deadline as well. In congressional committee testimony in March, the I.R.S. commissioner, Charles P. Rettig, said the estimated tax deadline hadn’t been changed because it would, in effect, be giving “a break” on interest and penalties to wealthy people, who would invest the money instead of paying the government.

But people who file estimated taxes also include sole proprietors and workers in the gig economy with modest incomes, accountants say. Many people who lost jobs in the pandemic switched to work delivering meals and groceries ordered by mobile apps, said Melanie Lauridsen, senior manager for tax policy and advocacy at the American Institute of Certified Public Accountants.

“That’s where the need is,” Ms. Lauridsen said.

The disconnect between the filing and estimated tax deadlines means tax preparers are pushed to get returns done by the traditional deadline anyway. “It’s putting a tremendous amount of stress on tax preparers,” said Rhonda Collins, director of tax content and government relations with the National Association of Tax Professionals.

In general, filers must estimate what they owe and round up to reduce the risk of underpaying. “It feels like it’s very much a guesstimate,” Ms. Collins said.

Should you incur a penalty when you file your tax return next year, you can request an abatement. Often, the I.R.S. is lenient with first-time errors, she said, especially when there are extenuating circumstances.

It’s also important to keep track of your income in 2021, tax professionals say. Many people had lower incomes than usual during 2020 because of the pandemic, and could see them rise in 2021 if the pandemic wanes as expected and the economy expands. If your income is turning out to be higher than expected, you may need to increase the amounts of your estimated payments later in the year.

View Source

Biden’s Tax Plan Aims to Raise $2.5 Trillion and End Profit-Shifting

WASHINGTON — Large companies like Apple and Bristol Myers Squibb have long employed complicated maneuvers to reduce or eliminate their tax bills by shifting income on paper between countries. The strategy has enriched accountants and shareholders, while driving down corporate tax receipts for the federal government.

President Biden sees ending that practice as central to his $2 trillion infrastructure package, pushing changes to the tax code that his administration says will ensure American companies are contributing tax dollars to help invest in the country’s roads, bridges, water pipes and other parts of his economic agenda.

On Wednesday, the Treasury Department released the details of Mr. Biden’s tax plan, which aims to raise as much as $2.5 trillion over 15 years to help finance the infrastructure proposal. That includes bumping the corporate tax rate to 28 percent from 21 percent, imposing a strict new minimum tax on global profits and levying harsh penalties on companies that try to move profits offshore.

The plan also aims to stop big companies that are profitable but have no federal income tax liability from paying no taxes to the Treasury Department by imposing a 15 percent tax on the profits they report to investors. Such a change would affect about 45 corporations, according to the Biden administration’s estimates, because it would be limited to companies earning $2 billion or more per year.

President Donald J. Trump’s 2017 tax cuts. Biden administration officials say that law increased the incentives for companies to shift profits to lower-tax countries, while reducing corporate tax receipts in the United States to match their lowest levels as a share of the economy since World War II.

Treasury Secretary Janet L. Yellen, in rolling out the plan, said it would end a global “race to the bottom” of corporate taxation that has been destructive for the American economy and its workers.

“Our tax revenues are already at their lowest level in generations,” Ms. Yellen said. “If they continue to drop lower, we will have less money to invest in roads, bridges, broadband and R&D.”

The plan, while ambitious, will not be easy to enact.

Some of the proposals, like certain changes to how a global minimum tax is applied to corporate income, could possibly be put in place by the Treasury Department via regulation. But most will need the approval of Congress, including increasing the corporate tax rate. Given Democrats’ narrow majority in both the Senate and the House, that proposed rate could drop. Already, Senator Joe Manchin III of West Virginia, a crucial swing vote, has said he would prefer a 25 percent corporate rate.

search of the lowest possible tax bill.

Companies also shift jobs and investments between countries, but often for different reasons. In many cases, they are following lower labor costs or seeking customers in new markets to expand their businesses. The Biden plan would create new tax incentives for companies to invest in production and research in the United States.

weakened by subsequent regulations issued by Mr. Trump’s Treasury Department.

Conservative tax experts, including several involved in writing the 2017 law, say they have seen no evidence of the law enticing companies to move jobs overseas. Mr. Biden has assembled a team of tax officials who contend the provisions have given companies new incentives to move investment and profits offshore.

Mr. Biden’s plan would raise the rate of Mr. Trump’s minimum tax and apply it more broadly to income that American companies earn overseas. Those efforts would try to make it less appealing for companies to book profits in lower-tax companies.

The S.H.I.E.L.D. proposal is an attempt to discourage American companies from moving their headquarters abroad for tax purposes, particularly through the practice known as “inversions,” where companies from different countries merge, creating a new foreign-located firm.

Under current law, companies with headquarters in Ireland can “strip” some of their profits earned by subsidiaries in the United States and send them back to the Ireland company as payments for things like the use of intellectual property, then deduct those payments from their American income taxes. The S.H.I.E.L.D. plan would disallow those deductions for companies based in low-tax countries.

Tax professionals say Mr. Biden’s proposed changes to that law could be difficult to administer. Business groups say they could hamper American companies as they compete on a global scale.

Republicans denounced the plan as bad for the United States economy, with lawmakers on the House Ways and Means Committee saying that “their massive tax hikes will be shouldered by American workers and small businesses.”

coupled with an effort through the Organization for Economic Cooperation and Development to broker a global agreement on minimum corporate taxation, will start a worldwide revolution in how and where companies are taxed. That is in part because the Biden plans include measures meant to force other countries to go along with a new global minimum tax that Ms. Yellen announced support for on Monday.

Treasury Department officials estimate in their report that the proposed changes to the minimum tax, and the implementation of the S.H.I.E.L.D. plan, would raise an estimated $700 billion over 10 years on their own.

Business groups warn the administration’s efforts will hamstring American companies, and they have urged Mr. Biden to wait for the international negotiations to play out before following through with any changes.

Members of the Business Roundtable, which represents corporate chief executives in Washington, said this week that Mr. Biden’s minimum tax “threatens to subject the U.S. to a major competitive disadvantage.” They urged the administration to first secure a global agreement, adding that “any U.S. minimum tax should be aligned with that agreed upon global level.”

However, some companies expressed an openness on Wednesday to some of the changes.

John Zimmer, the president and a founder of Lyft, told CNN that he supported Mr. Biden’s proposed 28 percent corporate tax rate.

“I think it’s important to make investments again in the country and the economy,” Mr. Zimmer said. “And as the economy grows, so too does jobs and so too does people’s needs to get around.”

View Source

Jamie Dimon predicts an economic boom that ‘could easily run into 2023.’

The annual letter to shareholders by JPMorgan Chase’s chief executive, Jamie Dimon, was published early Wednesday. The letter, which is widely read on Wall Street, is not just an overview of the bank’s business but also covers Mr. Dimon’s thoughts on everything from leadership lessons to public policy prescriptions.

“The U.S. economy will likely boom.” A combination of excess savings, deficit spending, vaccinations and “euphoria around the end of the pandemic,” Mr. Dimon wrote, may create a boom that “could easily run into 2023.” That could justify high stock valuations, but not the price of U.S. debt, given the “huge supply” soon to hit the market. There is a chance that a rise in inflation will be “more than temporary,” he wrote, forcing the Federal Reserve to raise interest rates aggressively. “Rapidly raising rates to offset an overheating economy is a typical cause of a recession,” he wrote, but he hopes for “the Goldilocks scenario” of fast growth, gently increasing inflation and a measured rise in interest rates.

“Banks are playing an increasingly smaller role in the financial system.” Mr. Dimon cited competition from an already large shadow banking system and fintech companies, as well as “Amazon, Apple, Facebook, Google and now Walmart.” He argued that those nonbank competitors should be more strictly regulated; their growth has “partially been made possible” by avoiding banking rules, he wrote. And when it comes to tougher regulation of big banks, he wrote, “the cost to the economy of having fail-safe banks may not be worth it.”

“China’s leaders believe that America is in decline.” The United States has faced tough times before, but today, “the Chinese see an America that is losing ground in technology, infrastructure and education — a nation torn and crippled by politics, as well as racial and income inequality — and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals,” he wrote. “Unfortunately, recently, there is a lot of truth to this.”

View Source

President Biden Unveils Plan to Raise Corporate Taxes

The Biden administration unveiled its plan to overhaul the corporate tax code on Wednesday, offering an array of proposals that would require large companies to pay higher taxes to help fund the White House’s economic agenda.

The plan, if enacted, would raise $2.5 trillion in revenue over 15 years. It would do so by ushering in major changes for American companies, which have long embraced quirks in the tax code that allowed them to lower or eliminate their tax liability, often by shifting profits overseas. The plan also includes efforts to help combat climate change, proposing to replace fossil fuel subsidies with tax incentives that promote clean energy production.

Some corporations have expressed a willingness to pay more in taxes, but the overall scope of the proposal is likely to draw backlash from the business community, which has benefited for years from loopholes in the tax code and a relaxed approach to enforcement.

Treasury Secretary Janet L. Yellen said during a briefing with reporters on Wednesday that the plan would end a global “race to the bottom” of corporate taxation that she said has been destructive for the American economy and its workers.

global minimum tax to 21 percent and toughening it, to force companies to pay the tax on a wider span of income across countries.

That, in particular, has raised concerns in the business community, with Joshua Bolten, chief executive of the Business Roundtable, saying in a statement this week that it “threatens to subject the U.S. to a major competitive disadvantage.”

The plan would also repeal provisions put in place during the Trump administration that the Biden administration says have failed to curb profit shifting and corporate inversions, which involve an American company merging with a foreign firm and becoming its subsidiary, effectively moving its headquarters abroad for tax purposes. It would replace them with tougher anti-inversion rules and stronger penalties for so-called profit stripping.

The plan is not entirely focused on the international side of the corporate tax code. It tries to crack down on large, profitable companies that pay little or no income taxes yet signal large profits to companies with their “book value.” To cut down on that disparity, companies would have to pay a minimum tax of 15 percent on book income, which businesses report to investors and which are often used to judge shareholder and executive payouts.

One big beneficiary of the plan would be the Internal Revenue Service, which has seen its budget starved in recent years. The Biden administration’s proposal would beef up the tax collection agency’s budget so that it can step up enforcement and tax collection efforts.

View Source

Big Companies Like FedEx and Nike Paid No Federal Taxes

Just as the Biden administration is pushing to raise taxes on corporations, a new study finds that at least 55 of America’s largest paid no taxes last year on billions of dollars in profits.

The sweeping tax bill passed in 2017 by a Republican Congress and signed into law by President Donald J. Trump reduced the corporate tax rate to 21 percent from 35 percent. But dozens of Fortune 500 companies were able to further shrink their tax bill — sometimes to zero — thanks to a range of legal deductions and exemptions that have become staples of the tax code, according to the analysis.

Salesforce, Archer-Daniels-Midland and Consolidated Edison were among those named in the report, which was done by the Institute on Taxation and Economic Policy, a left-leaning research group in Washington.

financial reports that include federal income tax expense. The institute used that data along with other information supplied by each company on its pretax income.

Catherine Butler, a spokeswoman for Duke Energy, responded in an email that the company “fully complies with federal and state tax laws as part of our efforts to make investments that will benefit our customers and communities.”

She pointed out that the bonus depreciation, intended to encourage investment in areas like renewable energy, “caused Duke’s cash tax obligations to be deferred to future periods, but it did not eliminate them.” According to a filing at the end of 2020, Duke has a deferred federal tax balance of $9 billion that will be paid in the future.

DTE Energy, a Detroit-based utility that was also found to have paid no federal taxes for three years, said major investments in modernizing aging infrastructure and new solar and wind technologies were the primary reasons last year. “For utilities, the benefit of these federal tax savings are passed on to utility customers in the form of lower utility bills,” it said in a statement.

Democratic candidates citing it to argue the tax code was deeply flawed.

Tax avoidance strategies include a mix of old standards and new innovations. Companies, for example, saved billions by allowing top executives to buy discounted stock options in the future and then deducting their value as a loss.

The Biden administration announced this week that it planned to increase the corporate tax rate to 28 percent, and establish a kind of minimum tax that would limit the number of zero-payers. The White House estimated that the revisions would raise $2 trillion over 15 years, which will be used to fund the president’s ambitious infrastructure plan.

Supporters say that in addition to yielding revenue, the rewrite would help make the tax code more equitable, requiring individuals and companies at the top of the income ladder to pay more. But Republicans have signaled that the tax increases in the Biden proposal — which Senator Mitch McConnell of Kentucky, the minority leader, called “massive” — will preclude bipartisan support.

Referring to the proposed revisions, Matt Gardner, a senior fellow at the taxation institute, said, “If I were going to make a list of the things I would want the corporate tax reform to do, this outline tackles all these issues.”

Deductions and exemptions wouldn’t disappear, but other changes like the minimum tax would reduce their value, he said.

View Source

An Accidental Disclosure Exposes a $1 Billion Tax Fight With Bristol Myers

Almost nine years ago, Bristol Myers Squibb filed paperwork in Ireland to create a new offshore subsidiary. By moving Bristol Myers’s profits through the subsidiary, the American drugmaker could substantially reduce its U.S. tax bill.

Years later, the Internal Revenue Service got wind of the arrangement, which it condemned as an “abusive” tax shelter. The move by Bristol Myers, the I.R.S. concluded, would cheat the United States out of about $1.4 billion in taxes.

That is a lot of money, even for a large company like Bristol Myers. But the dispute remained secret. The company, which denies wrongdoing, didn’t tell its investors that the U.S. government was claiming more than $1 billion in unpaid taxes. The I.R.S. didn’t make any public filings about it.

And then, ever so briefly last spring, the dispute became public. It was an accident, and almost no one noticed. The episode provided a fleeting glimpse into something that is common but rarely seen up close: how multinational companies, with the help of elite law and accounting firms and with only belated scrutiny from the I.R.S., dodge billions of dollars in taxes.

infrastructure plan that the White House unveiled on Wednesday proposed increasing the minimum overseas tax on multinational corporations, which would reduce the appeal of such arrangements.)

For the three years leading up to 2012, Bristol Myers’s tax rate was about 24 percent. The U.S. corporate income tax rate at the time was 35 percent. (It is now 21 percent.)

The company wanted to pay even less.

In 2012, it turned to PwC, the accounting, consulting and advisory firm, and a major law firm, White & Case, for help getting an elaborate tax-avoidance strategy off the ground. PwC had previously been Bristol Myers’s auditor, but it was dismissed in 2006 after an accounting scandal forced Bristol Myers to pay $150 million to the U.S. government. Now PwC, with a long history of setting up Irish tax shelters for multinational companies, returned to Bristol Myers’s good graces.

sided with the agency after it challenged a similar maneuver by General Electric using an offshore subsidiary called Castle Harbour. The I.R.S. also contested comparable setups by Merck and Dow Chemical.

The Bristol Myers arrangement “appears to be essentially a copycat shelter,” said Karen Burke, a tax law professor at the University of Florida. Since the I.R.S. was already fighting similar high-profile transactions, she said, “Bristol Myers’s behavior seems particularly aggressive and risky.”

The next January, the company announced its 2012 results. Its tax rate had plunged from nearly 25 percent in 2011 to negative 7 percent.

On a call with investors, executives fielded repeated questions about the drop in its tax rate. “Presumably, all drug companies try to optimize their legal entities to take their tax rate as low as they can, yet your rate is markedly lower than any of the other companies,” said Tim Anderson, an analyst at Sanford C. Bernstein & Company. “So I’m wondering why your tax rate might be unique in that regard?”

Charlie Bancroft, the company’s chief financial officer, wouldn’t say.

The more than $1 billion in tax savings came at an opportune moment: Bristol Myers was in the midst of repurchasing $6 billion worth of its own shares, an effort to lift its stock price. By January 2013, it had spent $4.2 billion. The cash freed up by the tax maneuver was enough to cover most of the remainder.

Tax Notes, a widely read trade publication, had also posted the document. When the I.R.S. provided a clean version, Tax Notes took down the original.

An I.R.S. spokesman declined to comment.

Cara Griffith, the chief executive of Tax Analysts, the publisher of Tax Notes, said the publication erred “on the side of not publishing confidential taxpayer information that was accidentally released through an error in redaction, unless it reaches a very high threshold of newsworthiness.”

David Weisbach, a former Treasury Department official who helped write the regulations governing the tax-code provision that Bristol Myers is accused of violating, agreed. PwC and White & Case “are giving you 138 pages of legalese that doesn’t address the core issue in the transaction,” he said. “But you can show the I.R.S. you got this big fat opinion letter, so it must be fancy and good.”

The current status of the tax dispute is not clear. Similar disputes have spent years winding through the I.R.S.’s appeals process before leading to settlements. Companies often agree to pay a small fraction of what the I.R.S. claims was owed.

“There is a real chance that a matter like this could be settled for as little as 30 percent” of the amount in dispute, said Bryan Skarlatos, a tax lawyer at Kostelanetz & Fink.

In that case, the allegedly abusive tax shelter would have saved Bristol Myers nearly $1 billion.

View Source

Biden Tax Plan Charts New Path to Economic Growth

President Biden’s ambitious plan to increase corporate taxes does more than just reverse much of the overhaul pushed through by his predecessor. It also offers a profoundly different vision of how to make the United States more competitive and how to foot the bill.

When President Donald J. Trump and a Republican Congress rewrote the tax code in 2017, most of the benefits went to the wealthiest Americans, with lower rates on businesses and on profits from investments. The guiding principle, proponents argued, was that cutting taxes on corporations and investors would encourage businesses to expand, creating more jobs and generating more wealth for everyone.

By contrast, the animating idea behind the tax plan put forward by the Biden administration on Wednesday is that the best way to increase America’s competitiveness and foster economic growth is to raise corporate taxes to finance huge investments in transportation, broadband, utilities and more.

The Business Roundtable, the U.S. Chamber of Commerce and the National Association of Manufacturers all welcomed the idea of pumping money into repairing and building the nation’s infrastructure, but recoiled at raising corporate taxes to do so.

said in a statement.

The biggest and most eye-catching proposal is to trim the sizable reduction in the corporate tax rate enacted under Mr. Trump. In 2017, Republicans shrank the rate to 21 percent from 35 percent. Mr. Biden wants to nudge the rate part of the way back — to 28 percent.

The increase will “ensure that corporations pay their fair share of taxes,” and fund critical investments “to maintain the competitiveness of the United States and grow the economy,” the White House stated in outlining the plan.

The other provisions are primarily intended to ensure that multinational corporations cannot avoid taxes on profits generated overseas. The hope is that this will reduce the temptation to set up operations or offices in foreign tax havens.

Wall Street has been wary of possible tax increases since the presidential election and has hoped that gridlock in Washington would moderate Mr. Biden’s agenda. On Wednesday, a spokesman for JPMorgan Chase said the bank’s chief executive, Jamie Dimon, believed that “the corporate tax rate for companies in the U.S. has to be competitive globally, which it is now.”

Supporters countered that the changes would do much more to promote growth and go a long way in curbing excesses of the 2017 tax legislation. Democrats have argued that the low-tax approach has failed to deliver broad economic gains, with only those at the very top benefiting. Targeted government spending on workers, students and infrastructure, they argue, would offer much more bang for the buck. What’s more, businesses base their decisions on a range of factors besides tax rates.

Even economists favoring low rates on business acknowledge that the 2017 tax cuts did not produce much of an increase in investment. Gross domestic product grew at a rate of 2.4 percent in the two years leading up to the law and 2.4 percent in the two years after it passed.

“There’s essentially no evidence that the tax change boosted investment,” said William Gale, co-director of the Urban-Brookings Tax Policy Center. He argued that investment went up in 2018 only because oil prices rose. And while the tax law favored investments in equipment and structures, it turned out that the biggest investments were not in those areas but in intellectual capital.

11.3 percent on their 2018 income.

pass through income to their owners or shareholders. (They pay taxes at the ordinary rate on their individual returns.)

The Biden administration has indicated that tax increases for the wealthy will help fund the second phase of the infrastructure plan, which is expected to be announced next month and will focus on priorities like education, health care and paid leave.

Gillian Friedman and Lauren Hirsch contributed reporting.

View Source

I.R.S. will begin issuing tax refunds in May for unemployment tax break.

Taxpayers who received unemployment benefits last year — but who filed their federal tax returns before a new tax break became available — could receive an automatic refund as early as May, the Internal Revenue Service said on Wednesday.

The latest coronavirus relief legislation — signed into law on March 11, in the thick of tax season — made the first $10,200 of unemployment benefits tax-free in 2020 for people with modified adjusted incomes of less than $150,000. (Married taxpayers filing jointly can exclude up to $20,400.)

But some Americans had already filed their tax returns by March and have been waiting for official agency guidance. Millions of U.S. workers filed for unemployment last year, but the I.R.S. said it was still determining how many workers affected by the tax change had already filed their tax returns.

On Wednesday, the I.R.S. confirmed that it would automatically recalculate the correct amount of benefits subject to taxation — and any overpayment will be refunded or applied to any other outstanding taxes owed. The first refunds are expected to be issued in May and will continue into the summer.

an updated worksheet and additional guidance in March for taxpayers that prefer paper.

View Source