Corporations and businesses with international operations may soon see a bigger tax bill. On March 31, 2021, President Joe Biden unveiled the American Jobs Plan, which focuses on upgrading and repairing physical infrastructure, investing in manufacturing, and expanding long-term healthcare services. And to offset the cost of the American Jobs Plan, the Made in America Tax Plan proposes tax increases on corporations and businesses with international operations.

What the Plan Includes

The following tax adjustments are consistent with Biden’s campaign proposals:

  • Raise the corporate rate from 21% to 28%
  • Adjustments to Global Intangible Low-Taxed Income (GILTI)
    • Raise tax rate from 10.5% to 21%
    • Calculate tax on a country-by-country basis – eliminating the ability to offset income from a low-tax country with tax from a high-tax country
    • Eliminate Qualified Business Asset Investment (QBAI) deduction
  • Strengthen anti-inversion rules
  • Repeal tax preferences for the fossil fuel industry
  • Eliminate deductions for moving jobs offshore and provide tax credits for onshoring jobs

The following tax adjustments were reflected in the plan:

  • 15% minimum tax on GAAP book income for very large corporations (Book income over $100 million)
  • Repeal Foreign Derived Intangible Income (FDII) deduction with a potential expansion to the Research and Development Credit
  • Repeal Base Erosion Anti-Abuse Tax (BEAT) and replace with a denial of deductions from US companies to countries with low tax
  • Increasing funding and resources to the IRS with a focus on increasing audit rates

Legislation to Be Drafted

More details on these proposed tax changes will come as legislation is drafted – but keep in mind there’s an expectation that there will be a plan to increase tax on high net-worth individuals as well.

Stay Tuned

Stay tuned to the Barnes Dennig blog for additional information and insights – or connect with a member of the Barnes Dennig tax team to learn more about how the proposed tax changes might affect you and your business operations – and how you can best position for expected change. Contact us through our website or give us a call at 513.241.8313. We’re here to help.