President Joe Biden unveiled a $2 trillion economic recovery plan on Wednesday afternoon, which includes raising the corporate tax rate from 21% to 28% to help pay for a massive overhaul of America's infrastructure.
The proposal, called the American Jobs Plan, is the first of the two economic recovery plans the administration plans to roll out in the coming weeks. Biden detailed the infrastructure overhaul on Wednesday in Pittsburgh and the second plan — the American Families Plan — sometime next month, according to the White House.
The American Jobs Plan includes:
$621 billion to repair and modernize bridges, roads and highways; modernize and expand public transit systems; invest in electric vehicles; improve rail systems; improve ports, waterways and airports
$300 billion to boost U.S. manufacturing and strengthen supply chains
$111 billion to ensure safe drinking water by replacing lead pipes and services lines and updating water infrastructure
$100 billion to expand high-speed broadband access
$100 billion to build a more resilient electric grid
$213 billion to produce, preserve and retrofit more than 2 million “affordable and sustainable” homes to address the nation’s affordable housing shortage
$100 billion to build and upgrade public schools
$180 billion for research & development and technologies of the future
$100 billion for workforce development programs
The Biden administration also incorporates measures to fight climate change through clean energy and address racial equity through jobs, transportation and housing.
"This is not a plan that tinkers around the edges," said Biden in Pittsburgh.
Biden calls for a $174 billion investment in the electric vehicle space — including rebates and tax incentives that would encourage Americans to buy electric vehicles, grant and incentives programs to build 500,000 electric vehicle chargers by 2030, and electrifying the federal vehicle fleet.
The administration says the plan will create "millions and millions" of jobs, though it has not yet provided an exact estimate.
In order to pay for the plan, Biden wants to hike the corporate tax rate to 28% — undoing a key part of Republicans’ 2017 tax cuts. He's introducing the Made in America Tax Plan alongside the American Jobs Plan. The tax plan aims to increase the global minimum tax for U.S. multinational corporations, to make sure they pay at least 21%. It also includes measures designed to prevent companies from offshoring jobs and moving profits to tax havens.
Paying for the plan by fixing a 'broken' tax system
A senior administration official told reporters on Tuesday night the $2 trillion would be spent over the course of eight years, and the tax changes would fund the plan over 15 years.
The official said the "broken" tax system is currently "providing greater incentive to evade the U.S. tax system and to locate production overseas." The White House argues the changes will make the U.S. more competitive and encourage domestic production in the United States.
"It's time to build our economy from the bottom up and from the middle out — not the top down," said Biden.
Sen. Ron Wyden (D., Oreg.), Chairman of the Senate Finance Committee, said he and Biden are "rowing in the same direction...by ensuring mega-corporations pay their fair share and overhauling Republicans' 2017 international tax provisions." In a statement, Wyden said he would introduce his own plan to overhaul international taxation next week.
Progressives, including Rep. Alexandria Ocasio-Cortez (D., N.Y.), argue the plan is not enough. Ocasio-Cortez said in a tweet that the plan needed to be "way bigger."
Meanwhile, Republicans have bashed the idea of raising taxes on corporations to cover the cost of an infrastructure plan.
The Business Roundtable — made up of CEOs of the nation’s biggest companies — urged Congress to pass a bipartisan infrastructure plan and reject a corporate tax hike.
“Business Roundtable has long supported user fee models, which includes business paying its share, to provide sustainable support for infrastructure investment,” said Business Roundtable CEO Joshua Bolten in a statement. “Business Roundtable 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 U.S. Chamber of Commerce described the plan to pay for the infrastructure package with tax increases as "dangerously misguided."
"Properly done, a major investment in infrastructure today is an investment in the future, and like a new home, should be paid for over time — say 30 years — by the users who benefit from the investment," said Neil Bradley, executive vice president and chief policy officer for the U.S. Chamber. "We strongly oppose the general tax increases proposed by the administration which will slow the economic recovery and make the U.S. less competitive globally — the exact opposite of the goals of the infrastructure plan."
The White House said it has already begun "extensive outreach" to Republican and Democratic members of Congress.
"I don't think you'll find a Republican today in the House or Senate...who doesn't think we have to improve our infrastructure," Biden said. "I'll have a good faith negotiation with any Republican who wants to get this done, but we have to get this done."
A senior administration official would not say if the administration would push to use the reconciliation process to pass the package without Republican support.
Jessica Smith is chief political correspondent for Yahoo Finance, based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.