Expectations for the $2trillion Infrastructure Project announced by US President Joe Biden on Wednesday 31/03/2021 are high. With his announcements he decides to shift to social justice with a new form of income redistribution in US society while stopping the tendency to constantly reduce corporate taxation.
Joe Biden is largely taking away the gifts of his predecessor, who in 2017 drastically cut corporate and high-income taxes.
by Thanos S. Chonthrogiannis
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Decades of tax-cutting experience has shown that in many cases company executives use the available amounts to increase their own fees or to massively repurchase shares of their companies, boosting their stock market value.
Therefore, it raises the corporate tax rate from 21% to 28% and increases income tax by more than $400,000 a year. It is estimated that the increase in corporate taxes will provide the treasury with $730bn over ten years, while the 21% tax on profits from subsidiaries of US companies abroad is expected to bring in another $550bn.
Taxes of more than $39.66% on annual personal incomes of more than $400,000 will bring in about $110bn. The idea underlying the infrastructure program is that businesses will contribute with their taxes to upgrading the services they undertake, while the improvements that businesses will experience will increase productivity, profitability, employment, and social well-being in general.
So, the goal of the Joe Biden policy is to improve government services while providing more opportunities and more protection for the people of the country.
Support for trade unionism is the big intersection presented with Joe Biden’s policy.
The cost of servicing American debt may be at historically low levels, but the US Federal Government’s public debt currently reaches 130% of GDP, or $27trillion, when the budget deficit in the Federal Government budget reached $3trillion (2020).
But if the US remains the world’s sovereign country, i.e., they issue their own currency but can also borrow in their own currency, they are not so worried about their public debt and the budget deficit.