The proposal announced on Wednesday is aptly named the American Jobs Plan. It totals $2.3 trillion over 8 years and is funded over 15 years with a rollback of the corporate income tax cut of 2017, restoring the corporate income tax rate to 28% from 21%. The plan would also reinstate the tax on foreign corporate earnings. Of the total, $620 billion would go toward traditional roads, bridges, ports, and other transportation. An additional $100 million would go towards expanding broadband, while the remainder would go toward creating affordable housing, expanding elder care, and boosting semiconductor manufacturing capacity at home.
The American Families Plan, which is expected to be proposed soon, doesn’t appear to be an infrastructure plan per se; and some call the plan social infrastructure. It includes initiatives for childcare, health care, and education. Funding would come from higher personal income and wealth taxes.
The expansiveness of the two plans and the funding sources will likely continue to be hotly debated in the ensuing months.
Infrastructure plans are considered important by both parties; however, there has not been much agreement on them since 2009, when the Build America Bonds program was established after the financial crisis. Passage of the American Jobs Plan might even be stymied by Democrats who are threatening to block passage of the bill if the SALT deductions (the ability to deduct state and local taxes) are not reinstated. While they wait to see the fate of the American Jobs Plan, state and local governments need to figure out how they are going to spend the $350 billion in direct aid they will receive from the $1.9 trillion American Rescue Plan passed on March 11, 2021, to provide COVID-19 relief. That legislation is also considered to be part of Build Back Better.
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