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President Biden proposing tax hikes to pay for a $2 trillion infrastructure plan

President Biden will ask Congress Wednesday to spend $2 trillion on an infrastructure plan over eight years, and pay for it by increasing taxes on corporations for nearly twice as long.

Driving the news: The package, which he will unveil during a speech in Pittsburgh, seeks to fulfill a range of promises he made on the campaign trail to fix the country’s crumbling infrastructure, slow the growing climate crisis and reduce economic inequality.

  • The bill is one of two large infrastructure-type packages the administration intends to introduce in the span of a couple weeks, and follows a $1.9 trillion COVID-19 stimulus package the president signed into law earlier this month.
  • The second infrastructure package, which will focus on issues such as health and education, could potentially double the overall price tag to $4 trillion — and include a set of tax hikes on wealthy individuals to fund it.

The details: The numerous infrastructure plans Biden is proposing to Congress fall into four buckets: transportation, home, care and research and development, according to a White House summary provided to reporters.

Among the initial spending is:

  • $621 billion for standard physical infrastructure such as building roads and bridges and modernizing public transit.
  • The president also will call on Congress to significantly ramp up the use of electric vehicles and charging stations for both civilians and the government, including electrifying school buses and the U.S. Postal Service’s fleet.
  • $100 billion for expanding broadband internet access, and another $100 billion to update the country's electric grid, a need whose urgency was highlighted by the blackouts in Texas this winter.
  • $213 billion for addressing economic inequality by modernizing buildings such as schools and VA hospitals. That spending would mobilize union trade workers to upgrade buildings, with a specific focus on underserved communities.
  • $400 billion in "care infrastructure" that would expand access to home or community care for people with aging relatives, or those with disabilities.
  • $100 billion for workforce development targeted at low-income and underserved communities.

Go deeper: Within the package, the administration is proposing a tax overhaul, in part to pay for the proposals.

  • Biden intends to raise the corporate tax rate from 21% to 28% for 15 years. President Trump convinced Congress to lower it from 35% to 21%.
  • To encourage corporations to conduct business in the U.S., the administration is proposing a global minimum tax and providing incentives to support onshoring.
  • Among the tax hikes expected in the second proposal being rolled out next month is an increase in the top individual rate for those making more than $400,000 annually from 37% to the pre-Trump rate of 39.6%.

What they’re saying: The administration is touting the package as a New Deal-style bill with an “historic” investment not seen since the creation of the interstate highway system under President Eisenhower, or the space race initiated by President Kennedy.

  • Both are presidents Biden has frequently cited as inspiration, along with FDR, and provide one glimpse into how he sees the shaping of his own presidential legacy.

Be smart: While infrastructure is typically touted as a bipartisan issue, Republicans have already expressed disapproval at the size of the bills and the tax increases to pay for them, and even some Democrats are concerned with certain details.

  • It’s still unclear whether Democrats, if short the 60 votes needed to pass the bill through the normal legislative process, would use budget reconciliation once again in the same year to pass the sweeping legislation with a simple 51-vote majority.

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