Pub. 11 2021-2022 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S May • June 2021 11 they will not support the plan unless it repeals the SALT cap. Expecting that no House Republicans vote to support the plan, House Democrats can only lose four votes and still pass the legislation. Some moderate House Democrats are concerned about increasing taxes as the U.S. economy struggles to recover from the COVID-19 pandemic. However, this may not stop the ultimate passage of the plan but could result in either phased-in or delayed effective dates for several of the proposals. How will the American Jobs Plan be funded? The White House projects the plan will cost $2.5 trillion over eight years and funded over the next 15 years by increasing corporate taxes and various other proposed tax changes. The plan, as proposed: • Increases the corporate income tax rate from 21% to 28%. • Imposes a 21% global minimum tax on U.S. corporations, calculated on a country-by-country basis. • Eliminates the rule allowing U.S. companies to pay zero taxes on the first 10% of profit when they locate investments in foreign countries. • Repeals the Foreign Derived Intangible Income (FDII) deduction. • Creates a 15% minimum tax on book income applicable to only the largest corporations (not yet defined). • Denies company expense deductions for moving jobs offshore. • Imposes more restrictions on corporate inversions. • Eliminates special tax preferences for fossil fuels (presumably, the expensing of drilling costs, accelerated asset expensing and percentage depletion deductions). The fact sheet also states these proposals “will be paired with a broader enforcement initiative to be announced in the coming weeks that will address tax evasion among corporations and high- income Americans” and may include additional tax code modifications. Additionally, President Biden “will be putting forward additional ideas in the coming weeks for reforming our tax code so that it rewards work and not wealth and makes sure the highest income individuals pay their fair share.” Are Tax Credits Part of the American Jobs Plan? Yes, the fact sheet mentions several tax credit additions and changes. Currently, proposed tax credits in the plan include: • A tax credit for transferring foreign jobs to the U.S. • A tax credit for low- and middle-income families and small businesses “to invest in disaster resilience.” • A tax credit for building electric transmission systems. • Modification of the Section 45Q tax credit (credit for carbon dioxide sequestration). • Tax credits for affordable housing, improving home energy efficiency, and for employers providing child care facilities. What Comes Next? Stay tuned. The Biden Administration intends to unveil a second proposal – the American Families Plan – to address child tax credits and paid leave provisions. Also anticipated are additional recommendations for increasing income taxes within the upcoming American Families Plan. n For more informat ion on thi s ar t ic le and more, please v i s i t EideBai l l y.com or reach out to us at one of our Colorado of f ices : Boulder 303.443.1911 Denver 303.770.5700 For t Col l ins 970. 223.8825 Grand Junc t ion 970. 245.5181 Several House Democrats have already indicated they will not support the plan unless it repeals the SALT cap. Expecting that no House Republicans vote to support the plan, House Democrats can only lose four votes and still pass the legislation.