By Akanimo Sampson
US businesses are raising alarms at the funding method for the ambitious infrastructure project of the Biden administration. In terms of funding, American Iron and Steel Institute’s (AISI) view for instance, is that the best way to fund infrastructure is through a dedicated user fee rather than through the corporate income tax, revenues from which go to the general treasury.
AISI has long advocated for bolstering the user fees that are dedicated to funding the Highway Trust Fund and other infrastructure funding mechanisms, the steel association president said.
National Association of Manufacturers says it is looking forward to learning more details of the proposed infrastructure plan. But, the organisation has taken a strong stance against the proposed funding of the infrastructure framework.
President Joe Biden on March 31 laid out an ambitious plan to rebuild the country’s aging infrastructure and create jobs in what he called a “once in a generation investment in America” that takes aim at everything from highways and ports to airports, transit systems, electric vehicles, and the digital highway.
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“We can’t delay … it’s long past due,” the president said in Pittsburgh Wednesday afternoon, where he formally unveiled the $2 trillion American Jobs Plan. In a fact sheet released by the White House earlier in the day, the administration stated the plan “will invest in America in a way we have not invested since we built the interstate highways and won the Space Race.”According to White House estimates, the plan will invest about 1% of GDP per year over eight years to upgrade the nation’s infrastructure. Some of the specific investment proposals include $621 billion for transportation infrastructure, incorporating $174 billion for the EV market, $115 billion to modernize bridges, highways and roads most in need of repair, and $85 billion to modernize existing public transit.
The proposal also calls for $100 billion aimed at renewing America’s power infrastructure, including a more resilient electric transmission system.
Other proposals with specific implications for manufacturers include a $50 billion investment to create a new office at the Commerce Department dedicated to monitoring domestic capacity and supporting production of critical goods.
The plan also calls for quadrupling support for the Manufacturing Extension Partnership.
The American Jobs Plan proposal drew immediate reaction from business groups, with several expressing support for making infrastructure a priority.
AISI, for example, welcomed the infrastructure proposal. President and CEO of the American Iron and Steel Institute, Kevin Dempsey, in a press statement said “AISI greatly appreciates President Biden’s commitment to building back better America’s roads, bridges, waterways, rail, electrical grid and other critical infrastructure – and doing it with American made steel.”
The United Steelworkers applauded the plan as well. “A large-scale investment is certainly long overdue, but more importantly President Biden has made it clear that he, like our union, takes an expansive view of infrastructure”, said USW International President, Tom Conway, in a statement.
Where enthusiasm waned among some business groups, however, is the proposed means to pay for the American Jobs Plan—and that’s with a boost to the corporate tax rate.
Biden has proposed increasing the corporate tax rate to 28%. It currently stands at 21% as a result of the Tax Cuts and Jobs Act of 2017 passed during the Trump administration, which saw the corporate tax rate reduced from 35%.
The proposed increase in the corporate tax rate is part of a larger overhaul to the corporate tax code outlined by the White House alongside the American Jobs Plan. The corporate tax changes would raise more than $2 trillion over the next 15 years, according to Biden administration.
“Manufacturers have played a leading role in the fight against COVID-19, and we will continue to play a leading role in our economic recovery. When manufacturing is strong, America is strong,” NAM President and CEO Jay Timmons said in a statement.
“Raising taxes on manufacturers would fundamentally undermine our ability to lead this recovery. Our industry fought for decades to achieve a tax system that includes competitive rates and modern international tax provisions.”
He went on to say that the bold infrastructure investment could be achieved in other ways, such as “a combination of revenue sources like those we identified in the NAM’s ‘Building to Win,’ which includes user fees and bond financing for capital projects.”
And from the National Retail Federation, in a statement attributed to NRF President and CEO Matthew Shay: “Investment in infrastructure needs to be a priority, but this legislation appears to be less about improving infrastructure and a lot more about a political agenda, at the expense of sound economic policy that benefits all Americans.”
The White House did not provide a timeline by which to turn Biden’s proposal into law. Wednesday’s announcement was the first volley in what is sure to be protracted negotiations.
