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The American employment plan
On March 31, 2021, the Biden government published the
American Jobs Plan (the "Infrastructure Plan") that is
A proposal which, if finally passed, aims to modernize outdated ones
Infrastructure, create additional jobs, and expand the United States
Global competitiveness of states. While much of the
The infrastructure plan describes areas in which capital allocation is required.
it contains numerous tax references, many of which could
Effects on the energy industry.
- Encouraging investments in electricity
Vehicles ("EVs")
The infrastructure plan contains provisions for domestic promotion
To support supply chains and the production of raw materials
American workers make batteries and electric vehicles and would take care of them
Consumer point-of-sale discounts and tax incentives to buy
American-made electric vehicles.
- Revitalizing America's Power
Infrastructure
Focus on investments in the power grid, infrastructure
The plan provides a targeted investment tax credit to provide incentives for the company
Development of at least 20 gigawatts of high-voltage capacity
Lines. The infrastructure plan states that this can be done immediately
mobilize tens of billions in private capital.
- Modernization of power generation and
clean electricity delivery
The infrastructure plan provides for an extension and a phase of 10 years
Reduction of an extended tax credit and production for direct payments
Clean energy generation and storage tax credit, all rolled into one
Efforts to modernize the energy sector and 100 percent
CO2-free energy by 2035.
- Clogging of orphaned oil and gas wells and
clean up abandoned mines.
The infrastructure plan would provide $ 16 billion upfront
The investment focused on plugging oil and gas wells and restoring and
Reclaiming abandoned coal, hard rock and uranium mines.
- Building next generation industries
(and extension of the tax credit under Section 45Q)
Realize that the market-driven shift towards cleaner energy
Projects offers significant infrastructure opportunities
The plan focuses on building next generation clean energy
Industry sectors. For example, the infrastructure plan would form a pair
Investment in 15 demonstration projects for decarburized hydrogen in
needy communities with a new production tax credit.
The infrastructure plan would also establish 10 pioneers
Carbon capture retrofit projects for large steel, cement and
chemical production facilities as well as large-scale support
Sequestration efforts. To speed up carbon deposition
Efforts would reform and expand the infrastructure plan
Section 45Q tax credit that facilitates direct payment and ease of use
industrial applications difficult to decarbonize, direct air collection and
Retrofitting of existing power plants.
The infrastructure plan also contains a number of others
Recommendations that could indirectly benefit the energy sector,
such as the tax credit extension under Section 48C.
Made in America tax plan
In addition to the infrastructure plan, the Biden administration
published a Made in America Tax Plan (the "Tax Plan"),
This is supposed to reward US investments and eliminate the profit
Relocate and ensure that other nations do not gain a competitive advantage
by becoming tax havens. So many energy companies and investors
operate or invest many of the provisions of the tax plan globally
could have an impact on operations, investments and other strategic decisions
when such provisions are ultimately enshrined in law.
The proposed tax plan includes, but is not limited to, the
The following:
- Increase in corporate tax rate
28 percent (from 21 percent under applicable law); - Create a new minimum of at least 15 percent
Tax on the company's "book income" (i.e. income)
Use companies to report profits to investors); - Elimination of certain fossils
Fuel-related tax regulations (both domestic and foreign fossils)
Fuel-related tax regulations) and repayments to the
Superfund Trust Fund to fight polluting industries; - Abolition of the derived foreign
Deduction of the intangible income and use of the income from this cancellation
to expand other research and development investments
Incentives; - Increase in global intangibles
Low tax income rate at 21 percent, calculation of the tax rate on a
from country to country and without the 10 percent exemption
based on foreign assets; - Promote worldwide acceptance of
Minimum corporate taxes and denial of deductions to foreign ones
Companies on payments that could allow profits to be shifted
the United States if the overseas corporations are in a country
this does not introduce a sufficient minimum tax; - Prevention from US companies
Reversing or using tax havens as a residence; - Refusal of corporate expense deductions
for offshoring jobs and providing a tax credit in support of the
Job onshoring; and - Improve tax enforcement
Business-Related Efforts – By Ensuring That The US
The Internal Revenue Service has the resources to deal with tax law
Enforcement efforts.
Taxpayers should carefully monitor both infrastructure plans
and the tax plan and assess the impact such plans may have
on investments, operations and strategic decisions.
Originally published by Mayer Brown, April 2021
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