How Are We Spending $10 Trillion?
Dubbed the American Jobs Plan, the behemoth bill will spend $1 trillion on roads, bridges, public transportation, electric cars, care homes, and modernizing the electric grid.
Another $100 billion will be spent on modernizing and building public schools.
It will also replace all lead pipes and revamp the nation’s water system.
Republicans are already lining up in opposition to the bill, which comes amidst an era of unprecedented government spending in America, largely precipitated by negative effects resulting from the pandemic. If the mammoth infrastructure bill is passed, the US will have spent $10 trillion in a single year.
For reference, that number is:
1. Equal to the GDP’s of Japan, Germany, and the U.K. combined.
2. More than the US has spent during the last five recessions combined.
3. More than the combined annual wages of all Americans.
The plan will largely be financed by higher tax revenues, which the Biden administration plans to collect by increasing the corporate tax rate to 28%, a rate that is still lower than what corporations paid before Donald Trump’s 2017 tax cuts (the corporate tax rate stood at 35% before Trump).
Biden’s tax overhaul, called the Made In America Tax Plan, will also target loopholes that allow multinational corporations to shift their profits overseas and avoid paying a hefty portion of their taxes. The plan would also increase the minimum tax rate on U.S. multinational corporations foreign income to 21%. In a move to bolster support for the infrastructure bill’s funding, US Treasury Secretary, Janet Yellen, has also advocated for a global minimum tax rate of 21% on multinational corporations.
If the Democrats are indeed able to pass all of this legislation, it is estimated the tax hikes would fully pay for projects in the American Jobs Plan in 15 years, in addition to reducing deficits in the years following.
Shifts For LG & Toshiba
The South Korean electronics company, LG, has shuttered its mobile phone business, citing a slump in sales and an “incredibly competitive” smartphone market, and opted instead to focus on its smart appliance and electric vehicle component businesses. LG controls approximately 10% of the US smartphone market, but only about 2% globally.
Meanwhile, the Japanese tech conglomerate Toshiba recently received a $20 billion buyout offer from CVC Capital Partners, a private equity firm from Luxembourg. The offer represented a 30% premium on Toshiba’s market value, which sent shares of the company soaring 18% Wednesday before trading was suspended.
Toshiba had been marred by a series of scandals stretching from its books to its boardroom. Shareholders recently held an extraordinary meeting in which they voted for an independent probe of Toshiba’s scandal-ridden business practices.
The decision follows accusations by shareholders of the company’s efforts to sidestep accountability, suppress their voice, and thwart activist investors.
