U.S. President Joe Biden has announced a multi-billion investment in the social infrastructure of the United States. This week marks his hundredth day as president, and he delivered his first address to the joint Congress.
Biden's administration is set to make significant investments in more childcare, better education, healthcare, and extended paid parental leave.
For this so-called American Families Plan, he intends to spend $1 trillion, in addition to $800 billion in tax credits. The $1.8 trillion cost will be covered by raising taxes on wealthy Americans (with incomes over one million dollars) and large corporations, while making an exception for small farmers and family-run agricultural businesses.
A new transfer and inheritance tax will be introduced on the sale of companies and stock packages, applicable to transactions and inheritances over one million dollars. However, this will not apply to agricultural businesses that continue to be run by children and heirs.
The new U.S. tax plans also bring an ambitious global tax agreement closer to reality. Currently, multinationals shift their profits between countries (so-called 'tax havens') to pay little tax. Biden aims for a single global minimum tax rate.
Since 2013, the Organisation for Economic Cooperation and Development (OECD) has been working on plans to effectively tax large corporations. Pending such a global agreement, the European Union has shelved plans for its own tax on internet companies like Google and Facebook.
Biden will visit Europe in June and is expected to seek agreements on closer economic cooperation with EU countries during his trip.
Several EU countries, including Germany, France, and the Netherlands, have responded cautiously positively but have not explicitly endorsed the proposed 21% rate.
According to Dutch MEP Bas Eickhout (GroenLinks), there remains a risk that low-tax European countries like Ireland will try to negotiate this rate downwards. In a resolution, a broad majority of the European Parliament yesterday also welcomed the U.S. proposal for a minimum tax rate.