Last Updated: January 18, 2022
With the aim of recovering the pandemic-hit economy, President Biden introduced his American Jobs Plan on March 31. The plan means to expand broadband availability, improve US transportation and drinking-water infrastructure, pay elderly care, aid research and manufacturing, and, in his own words, to create “the strongest, most resilient, innovative economy in the world.” It is supposed to be implemented over a period of eight years.
Biden is planning to fund this $2 trillion venture by increasing corporate tax from 21% to 28%. He also announced a 21% minimum tax on foreign earnings and a 15% tax on big companies. As expected, this announcement was met with criticism by many companies. However, Amazon, who Biden specifically mentioned as an example of a company paying too little, has expressed its support of the tax raise via its founder Jeff Bezos.
Who Will Be Hit the Hardest?
Paying taxes alone or with help is each US citizen’s obligation to their country, and companies are no exception. Although they report huge profits, it’s not rare for companies to try to find loopholes and pay as little in taxes as possible—even no taxes at all, such as in Amazon’s case.
Amazon and taxes have been a recurring topic in the media for the past few years. The massive company focusing on cloud computing, ecommerce, AI, and digital streaming has come under fire for not paying any federal taxes for two years. Even when Amazon does pay taxes, it’s often censured for using multiple loopholes to reduce the amount it pays, at one point even receiving a federal tax refund of $129 million.
Amazon is a part of the Chamber of Progress—a newly-established industry coalition between Amazon, Uber, Facebook, Google, and other technology companies. The Chamber of Progress has openly shared its support of the new bill, with its CEO, Adam Kovacevich, stating, “The plan speaks to a lot of goals that I think many people in the tech industry have wanted to see for a long time.” Although the Chamber of Progress has voiced its support for the tax hike, its stance on the 28% tax rate isn’t known yet.
Technology and pharmaceutical companies are expected to suffer the harshest consequences from these changes, especially those that manufacture their goods abroad.
The 28% isn’t set in stone, and Biden has stated that he’s open to negotiation. Still, the proposal has received a lot of backlash from companies and organizations such as the Business Roundtable and the US Chamber of Commerce. Republicans have also voiced their displeasure with this change, the reason being that American companies would no longer be able to compete with foreign ones.