This past week, President Biden unveiled his American Jobs Plan, a $2.3 trillion dollar plan to upgrade the nation’s infrastructure over 8 years.
As we wrote about this past month, the American Society of Civil Engineers recently issued its 2021 Infrastructure Report Card which gave the country’s infrastructure a cumulative grade point average across several areas including roads, public transportations and schools of a disappointing C-. According to a White House fact sheet on the American Jobs Plan, while the United States is the wealthiest county in the world it currently ranks 13th when it comes to the overall quality of its infrastructure.
Infrastructure spending at the federal level has historically been paid for through the gas tax. Currently, that tax is 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel. The last time the federal gas tax was increased, however, was nearly 30 years ago in 1993. The reason for this long hiatus? Voter backlash and backlash by big businesses whose fleets still primarily rely on fossil fuels and diminishing returns as the number of electrical and hybrid vehicles increasingly hit the streets.
Biden’s $2.3 trillion dollar plan, rather than relying on an increase in the federal gas tax, would instead increase the corporate tax rate from its current 21% to 28%. The plan would also discourage companies from moving operations overseas by, among other things, increasing the offshore tax rate, also known as the global intangible low-taxed income or GILTI tax rate, to 21%. Costs of the plan are expected to be offset over 15 years through the additional tax revenue.
So where will the money go? While a large portion of the $2.3 trillion dollars would be directed at infrastructure improvements, the plan provides funding for more than just infrastructure. A high level breakdown of where dollars would go is as follows:
- Transportation Infrastructure: $621 billion. This includes $174 billion on electrical vehicle stations, electrical bus fleets, and replacing the federal government’s fleet fo diesel vehicles with electrical vehicles, $115 billion to fix roads and bridges, $85 billion to modernize transit systems, and $80 billion for Amtrak improvements and expansions.
- Housing, Schools, Water and Broadband: $650 billion. This includes $213 billion for affordable housing, $111 billion for clean drinking water programs, $100 billion for public schools, $100 billion for high-speed broadband networks, $40 billion for public housing, $18 billion for Veterans Affairs hospitals and clinics, $16 billion for to plug oil and gas wells and reclaim abandoned mines, and $12 billion for community colleges.
- Senior Housing and Housing for the Disabled: $400 billion. This would include expanding a Medicaid program to make services available and boost pay for care workers.
- Research, Development and Manufacturing: $300 billion. This includes $180 billion on research and devlopment with a focus on clean energy, reducing emissions and climate change research and $50 billion toward semiconductor research and manufacturing.