By Gregory Zerzan, Shareholder
Last week, President Biden unveiled a massive infrastructure development proposal that calls for a total of $2.3 trillion in new federal government spending. Much of the proposed spending could potentially inure to the benefit of Pacific Northwest entities, in both the public and private sectors. However, the plan also calls for significant changes to the tax code that would have serious ramifications for corporations. The proposal is likely to face significant challenges and changes as it proceeds through Congress.
President Biden’s proposal is broken into several broad categories. As stated in the public announcement of the plan, the proposal’s focus is:
- Building a “world class transportation infrastructure” by fixing highways, rebuilding bridges, and upgrading ports, airports, and transit systems;
- Rebuilding clean drinking water infrastructure, a renewed electric grid, and providing high-speed broadband to all Americans;
- Building, preserving, and retrofitting more than two million homes and commercial buildings; and modernizing and upgrading public buildings like schools, Veterans’ hospitals, and federal buildings;
- Solidifying the infrastructure of our care economy through increased incentives to hire and compensate essential home care workers; and
- Investing in research and development, manufacturing, and small businesses; and training workers for “the jobs of the future.”
Pacific Northwest entities could gain from the proposed increased spending on water efficiency and recycling programs, Tribal Water Settlements, and dam safety. The proposal’s $115 billion allocation for roads, bridges, and local thoroughfares would ensure plenty of new construction opportunities for contractors. The proposal also allocates $85 billion to public transit systems, including expanding existing services, $25 billion to airports, and $17 billion for ports and waterways, all of which create new opportunities for local workers and contractors while also opening new markets and tourism opportunities. Pacific Northwest tribes in particular would benefit from the plan’s emphasis on providing funding to tribal communities for expanded access to broadband, enhanced clean water infrastructure, and investments in climate resiliency.
The plan contains various proposed tax changes which would impact Pacific Northwest businesses. These include the creation or expansion of credits for clean energy production, storage and transmission, and credits for making buildings more energy efficient. However, the plan also proposes to increase the corporate tax rate to 28 percent, including a “corporate minimum” tax of 21 percent and a 15 percent minimum tax on the income corporations use to report their profits to investors, or “book income.”
The announcement of the “American Jobs Plan” is the first step in a long process before these proposals can become law. First, the various pieces of the plan must be proposed as legislation and considered by the various congressional committees of jurisdiction. The legislation must pass each house of Congress; any proposals to increase taxes must first be passed by the House of Representatives before it is passed by the Senate (Article I, Section 7, Clause 1 of the United States Constitution states: “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”). After each body passes the same bill or bills, the proposal(s) must be signed by the President.
It is a certainty that the final legislation will bear only partial resemblance to the President’s proposal. Nevertheless, it is likely that significant new federal spending for infrastructure development is coming, along with changes to the tax code. Jordan Ramis PC attorneys remain ready to help navigate these changes through all stages of the process.
Gregory Zerzan is a Jordan Ramis PC attorney with legislative, regulatory, and cabinet agency experience who advises clients through their interactions with Congress and federal agencies. Contact him at firstname.lastname@example.org or (503)-598-7070.