The Biden administration hopes to increase taxes on corporations to support a massive $2 trillion infrastructure investment over 15 years. Hundreds of billions would go to science and energy research and support for domestic manufacturing, including chip fabrication plants.
The bulk of the total will go for better roads, bridges and airports but there is also a heavy focus—about 25% of the total--on broadband upgrades, basic science and technology research and support for domestic manufacturing of chips and electronics critical to supply chains.
Biden also wants reliable, affordable high-speed broadband for every American, calling on Congress for a $100 billion investment. His plan calls for future proofing broadband infrastructure in unserved and underserved areas, which were hurt hardest during the pandemic due to a lack of access to online work and education.
President Biden will detail much of the plan in a speech in Pittsburgh late Wednesday. A Fierce Electronics analysis of the plan highlights the following proposed investments, all subject to Congressional approval:
-- $100 billion for a new office in the Commerce Department ($50 billion) to monitor industrial capacity and fund investments in support of critical goods such as semiconductors; semiconductor manufacturing and research ($50 billion) as called for the CHIPS Act.
--$52 billion invested in domestic manufacturing, including modernizing the supply chain including the auto sector; creation of a new financing program to support debt and equity investment for manufacturing.
-- $35 billion for a range of solutions needed for technology breakthroughs, including demonstration projects for offshore wind, quantum computing, electric vehicles, and advanced rare earth element separations.
-- $120 billion for a new National Science Foundation directorate ($50 billion) to focus on semiconductors and advanced computing, communications and biotechnology; upgrades to research labs nationwide ($40 billion); and R&D to spur innovation and job creation including in rural areas ($30 billion)
--$14 billion for National Institutes of Standards and Technology to bring industry, academia and government together to advance technologies for future competitiveness against China and others.
--$20 billion for regional innovation hubs and a Community Revitalization Fund.
--$46 billion in an investment in federal buying power to enable the manufacture of electric vehicles, charging ports, and electric heat pumps for buildings and homes. The president has set a goal of net-zero emissions by 2050.
Biden’s rationale for R&D investment
President Biden last week noted that R&D has fallen in recent decades to less than 1% of GDP, a figure he wants improved to about 2%.
In order to win the 21st Century economy, President Biden believes America must get back to investing in researchers, laboratories and universities across our nation, White House officials said on Tuesday.
“We’re one of the few major economies where we’ve seen public investment, as a share of GDP, decline over the past 25 years,” said a senior official in a call with reporters. “We’re seeing China and other countries significantly increase their investments. And we have a moment of opportunity now, particularly as we lay bare the vulnerabilities in our own supply chains and technology infrastructure to do a transformational investment in R&D and domestic incentives to manufacture the innovations that come from the R&D in the United States and all across America…”
The plan includes historic investments in R&D, in clean energy R&D and providing incentives for domestic production for manufacturing semiconductors, for batteries in clean energy technologies, the senior official added.
Roads, bridges, broadband
R&D, manufacturing and science hardly comprise the biggest components of the infrastructure plan. It also includes:
--$621 billion to improve transportation infrastructure
--$85 billion to modernize public transportation
--$100 billion for broadband to every American
--$50 billion for dedicated investments to improve infrastructure resilience against floods, wildfires, hurricanes and other risks.
--$25 billion for airports, including upgrades to FAA assets to ensure safe and efficient air travel
--$17 billion for ports, ferries and inland waterways
Taxes proposed on corporations
To pay for all of it over the next 15 years, the Biden plan calls for increasing the corporate tax rate to 28% up from 21%. To discourage offshoring of jobs, the minimum tax for U.S. multinationals would go to 21%, an increase for a sliding scale under the current system.
Companies would be denied expense deductions for offshoring jobs and given credits for onshoring. Also, the plan would eliminate tax preferences for fossil fuels.
Some reports have suggested the plans includes tax increases on individuals making more than $400,000 a year, but a Biden administration fact sheet for the $2 trillion American Jobs Plan makes no mention of tax increases on individuals.
The American Jobs Plan is broken into two parts with the second portion to be discussed in coming week, according to White House officials in a briefing on Tuesday. The total of both parts could reach $3 trillion to $4 trillion in total, based on estimates in prior reports.
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