FROM OUR CORRESPONDENT
WASHINGTON – Joe Biden wanted to call it The American Jobs plan, comparing it to Franklin Delano Roosevelt’s New Deal of 1933 or the space race. In short, an epochal plan, with public investments of 2.2 billion dollars, spread, on average, over eight years. Goals: to create millions of well-paid jobs; rebuild the country’s infrastructure; reposition the United States in competition with China.
Biden introduced him yesterday, in a speech in Pitthsburgh, Pennsylvania: We have to hurry. America is the richest country in the world, but only the thirteenth in terms of infrastructure. There are four great chapters of investments. First: transport. Roads, bridges, railways; but also the creation of a network of 500,000 charging stations for electric cars. Second: utility networks, that is the obsolete water pipes; electricity; Internet broadband; projects to renovate around two million homes, as well as schools and hospitals. Third: modernization of care facilities for the elderly, the disabled, the most disadvantaged. Fourth: at least 180 billion for research and technological development to keep pace with China and gain world leadership in environmental science and innovation. Operations to be conducted within a paradigm reminiscent of Trump’s America First: we must create a national value chain that goes from industry to consumer.
There is, however, a key question: where to find resources? Public debt is already 129% of gross domestic product. Federal Reserve Chairman Jerome Powell argues that the government doesn’t have to worry about debt at this stage. There are other emergencies. However, Janet Yellen, Secretary of the Treasury, convinced Biden not to rely on the automatisms of the economic cycle: injection of public spending (or tax cuts), restart of growth and, therefore, of tax revenues. Here then is that the maneuver provides for an increase in taxes for the incomes of individuals exceeding $ 400,000 and, above all, the increase in taxes on business profits. These two measures are expected to generate over 2 trillion in revenue over the next 15 years.
But be careful, because this is where the most serious political problems will arise. In 2017, Donald Trump had reduced his profit tax from 35% to 21%. Biden, at Yellen’s suggestion, wants to raise the rate to 28%. Yesterday Biden was very tough: A recent study showed that 91 companies out of the top 500 listed by Fortune they paid zero taxes in 2018, including Amazon. Or again: Large companies paid an average rate of 8% in 2018. I ask you, how can a teacher have to pay 22% and Amazon zero ?. The Administration aims to eliminate the loopholes scattered in the Tax Code. Although the real issue is preventing multinationals from migrating to tax havens. The White House will conduct an offensive to persuade other countries of the world to adopt a strong minimum tax on multinationals. Greetings, it comes to say. The diplomatic initiative could also involve several states of the European Union.
In the meantime, however, the president will have to face opposition from the Republicans, opposed to any tax hike, and confrontation with influential lobbies. Just take a quick look at the list of those 91 zero-tax companies: in addition to Amazon (which disputed the results of the study), there are Delta, Chevron, Netflix, Starbucks, Halliburton. Furthermore, and a fact that worries many democratic parliamentarians, medium and small businesses, already hit hard by the pandemic, would also be penalized.