To finance his ambitious infrastructure investment program, US President Joe Biden wants to raise taxes on businesses. In total, the American president foresees ...

United States: Joe Biden raises corporate taxes

Joe Biden at the White House in Washington, Thursday, April 1, 2021. REUTERS - TOM BRENNER

Text by: Patricia Lecompte

4 min

To finance his ambitious infrastructure investment program, US President Joe Biden wants to raise taxes on businesses.

In total, the American president plans to invest 2,000 billion dollars over eight years in the country's infrastructure with the objective of creating millions of jobs.

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In his tax reform Joe Biden wants to increase the corporate tax from 21 to 28%.

Anxious not to increase the taxation of households earning less than 4,000 dollars per year, the American president is turning to companies, which, according to him, benefit from a particularly advantageous rate.

In particular, he wants to involve those who make significant profits abroad.

Indeed, the tax reform plans to increase the minimum taxation on the profits that large groups make abroad.

It would drop from 10.5% to 21%.

The

giants of the tech

are particularly targeted.

They will be required to pay the tax authorities the difference between the rate paid abroad and the minimum American rate of 21%.

A direct attack on tax optimization which has allowed them to shelter their profits in tax havens.

Biggest increase since 1968

Joe Biden, who relies heavily on companies to finance one of his flagship measures, tried to reassure the bosses.

“

I have nothing against millionaires and billionaires,

” he promised.

While pleading for a fiscal rebalancing, the US president was indignant that a teacher is subject to a tax rate of 22% when "

Amazon and others pay no federal tax

The tenant of the White House, who is preparing to unravel

Donald Trump's

tax reform

of 2017 which lowered the corporate tax from 35 to 21%, points out that despite this increase, the new rate will remain at the lowest since World War II, with the exception of the Trump term.

Established since 1909, the corporate tax climbed to 52.80% in 1968 and then kept falling.

The

president's wish

to reverse fifty years of continuous corporate tax cuts provokes the discontent of the bosses.

According to a study by Strategas, this increase would represent for the Treasury 300 billion dollars in additional revenue, or 1.3 point of GDP.

It would be the biggest tax hike in the United States since 1968. But in reality, companies rarely pay such a percentage.

According to a study by a congressional committee, they were taxed at a rate of 16% before Donald Trump's reform and 8% afterwards.

Thanks to different tax tools they can lower their tax rates.

►

To read also: Biden proposes an investment plan that America will remember "in 50 years"

To finance the Covid debt

If Joe Biden's tax reform is passed by the Senate, this would however place the United States among the OECD states with the highest tax rate after France and Colombia where it is 32%, or even Australia, Mexico and Portugal with a 30% tax, followed by Belgium and Spain at 25%, then Italy at 24% and Germany at 16%.

Conversely, the most tax-attractive countries for companies are Switzerland with a rate of 8.5%, Hungary 9%, Ireland 12.5% Lithuania 15 and Luxembourg with 18%.

Joe Biden is not the only one who believes that the corporate tax should be used to

support the economy

France, which plans in 2021 to increase the tax rate for large companies from 26.5% to 27%, declares through the voice of its Minister of the Economy Bruno Le Maire to allocate corporate tax to reimbursement of Covid debt.

►

Also to listen: Plan Biden: "The American economy cannot function without bridges and roads"

United States: Joe Biden raises corporate taxes

United States: Joe Biden raises corporate taxes

Biggest increase since 1968

To finance the Covid debt

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