The Made in America Tax Plan
The Made in America Tax Plan was introduced by President Biden at the end of March, along with the American Jobs Plan. Last week, we talked about what the American Jobs Plan contained; this week, we lay out the Made in American Tax Plan. We know tax language can be overwhelming for anyone, particularly for an entrepreneur who wants to know how their business will be affected. Our goal is to keep you informed with the basics, but it is still important to speak with a qualified accounting professional for more individualized needs.
Tax Rate Changes
One of the biggest factors in the Made in America Tax Plan is the change in business tax rates and incentives. The plan aims to increase the corporate tax rate from the current 21 percent to 28 percent. Along with that, a minimum 15 percent tax on book income for businesses that have a net income of over $100 million but owe no income tax.
In an effort to keep businesses from moving overseas, certain tax incentives and write-offs will be changed. The plan would prevent U.S. corporations from being able to invert their business and avoid paying federal taxes. In addition, it would eliminate deductions available relating to offshoring jobs. Other changes in the tax code could also take place, resulting in more complex tax planning requirements.
To make sure these changes are imposed, the Made in America Tax Plan would also invest funding into the Internal Revenue Service. Currently, less than 50 percent of large corporations are audited by the IRS. The money would go toward resources within the IRS to expand their ability to audit large corporations and high-income individuals.
Where to go from here:
Once again, keep in mind that the Made in America Tax Plan has only been introduced to the public by the President, not introduced to Congress. It still needs to be brought to Congress and passed in both the House and the Senate before being signed into law or passed through budget reconciliation. While many people in office support its passing, there is still the potential for it to be changed or knocked down entirely.
CPA On Fire can help you navigate these evolving waters as an entrepreneur. We will keep you posted on the updates as more changes roll out. In the meantime, schedule a free financial review with us to see what we can do to help you and your business.