American businesses are expected to widely oppose corporate tax increases in the $2 trillion infrastructure plan being forwarded by President Biden.
However, technology and electronics companies stand to benefit from the investments, should Congress go along.
Take Cisco, provider of a wide variety of networking products crucial to support better infrastructure for transportation, communications and utility systems for water, natural gas and electric.
Cisco CEO Chuck Robbins told Yahoo Finance Live on Monday, “some version of it [infrastructure bill] will certainly be passed” by Congress. “I think there is a commitment from both sides.”
The massive package includes $100 billion for universal broadband, which Robbins said would “certainly” lead Cisco’s customers to build out more infrastructure and “probably accelerate 5G deployments, which would probably be good for us.”
On the other hand, the Business Roundtable issued a statement that it “strongly opposes corporate tax increases as a pay-for for infrastructure investment. Policymakers should avoid creating new barriers to job creation and economic growth, particularly during the recovery.”
The debate within businesses over the infrastructure plan will be intense. Get taxed at 28%, up from 21%, on the one hand, but try to win contracts based on the $2 trillion on the other.
According to President Biden’s remarks introducing the plan in Pittsburgh on Wednesday, that corporate tax increase would fund $1 trillion of the plan over 15 years. Another $1 trillion in funding will come from on an increase to 21% for the global tax paid by multinational corporations, Biden said.
Alluding to strong opposition to the corporate taxes in Congress and from large businesses, Biden said, “I hope and believe a number of businesses will join this effort.” He said he hoped the divisions of the moment do sacrifice the nation’s future.
Domestic chip manufacturing
One provision in the Biden plan calls for $50 billion to promote domestic semiconductor manufacturing and research, something Intel and other large chipmakers have called for.
The Semiconductor Industry Association said Wednesday that the Biden plan “would invest ambitiously in U.S. semiconductor workers, manufacturing and innovation. Semiconductors are foundational to America’s economy and job creation, national security and critical infrastructure. We applaud the president’s leadership.”
Congressional leaders who supported the CHIPS Act suggested measures to bolster chipmakers should include tax deferrals to build new fabrication facilities. Intel last week announced plans to build two new plants in Arizona in coming years with $20 billion of its own funds.
Intel also issued a statement applauding Biden’s focus on revamping U.S. infrastructure. Al Thompson, vice president of U.S. government relations, said the president recognizes that semiconductor technology “is a critical component of infrastructure in an increasingly computerized world… Infrastructure investment drives widespread social and economic benefits, and digital and physical infrastructure must be closely linked if America is to remain competitive and prosperous.”
Cisco provides a ready example of the various ways electronics and information technology have been used with Internet of Things projects and smart city work around the globe. Many of the elements of the Biden plan also focus on cities and areas underserved by broadband and technology. Biden has pointed to needs in decaying cities and even rural communities where housing and plumbing is in decline alongside and roads, bridges and schools are substandard.
Cisco recently shared four case studies of its ongoing work that relate to making communities smarter technologically. One includes work to bridge the digital divide in a Texas community with wireless equipment to provide Wi-Fi access to schools and homes. Another project in Albuquerque was designed to bolster security with technology to protect the city’s water infrastructure.
In Texas, the Department of Transportation is working with AT&T FirstNet and Cisco to improve traffic safety by installing rugged gateway technology at intersections to work with traffic signals and provide a green lane to first responders as they race to accident scenes.
Other vendors and the government of the Netherlands are implementing a similar approach throughout that country’s highway network.
In Las Vegas, Cisco said lidar or video sensors are being installed on traffic signal poles to detect pedestrians in intersections in real time which can be forwarded to a traffic management center. Data Logic software can correlate pedestrian detection data with the signal phase data to determine if the pedestrian is crossing safely. If it is not safe, the system can send alerts to street side signs to warn drivers to slow down or alter the signal to red to stop traffic.
“I see commonality with what Cisco is active in and what the president is proposing,” said Vikas Butaney, general manager of Cisco IoT, in an interview with Fierce Electronics. “There’s a lot of alignment in the city environment” with IoT technology and the Biden plan. “Cities are in a very difficult position with all these services they have to provide. They have a very important role.”
A Cisco spokesman added on Wednesday that the company looks forward to working with Congress and the administration to strengthen the nation’s digital infrastructure to “help businesses, schools, hospitals and government agencies modernize. It’s critical that the nation’s physical, industrial and digital infrastructure are all powered by modern technology infrastructure.”
Technology spinoffs from space race
Long-time technology analyst Jack Gold of J. Gold Associates said the president’s plan “offers massive benefit in nearly every sector of tech, since any new infrastructure will almost always include smart capabilities. And that includes the massive use of cloud-based resources as well.”
In his speech, President Biden mentioned the ability to reach bipartisan support in the 1950s for the interstate highway system nationwide and support for technology used in the space race in the 1960s.
“I see this plan as a lot like the space race in the 60s,” Gold said. “The money spent on space had major implications for other industries as well, including chips, healthcare, even food processing. And, who can forget Velcro!”