Georgia businesses could feel a dual impact from the massive infrastructure plan proposed this week by President Biden, potentially facing higher taxes but also improved ways to make profits.
The $2.3 trillion plan could reshape the economy as money is spent on bridges, roads, utilities and technology.
Some of that money would come from raising the taxes on the profits of many companies and corralling money that global firms have sheltered overseas.
Most large companies and chambers of commerce contacted by The Atlanta Journal-Constitution said it was too early to guess at the effects of Biden’s plan, which a sharply divided Congress would need to approve.
UPS — while not commenting directly on the plan — said it sees the connection between infrastructure and profits.
“UPS supports greater investment in America’s infrastructure to enhance goods movement, alleviate congestion and promote U.S. economic competitiveness,” said Danielle Cassady, spokeswoman for the Sandy Springs-based delivery giant. “Additionally, UPS believes that improving the resiliency of our nation’s surface transportation networks should be prioritized in order to provide significant community and environmental benefits.”
UPS moves roughly 6% of the nation’s gross domestic product each day, she said.
The scope of the plan — $2.3 trillion in a $22 trillion economy — comes after several other large packages and is greater than any single government intervention in the economy since World War II. In addition to spending on infrastructure, it includes changes in corporate taxes.
For business, the biggest revisions are: increasing the corporate tax rate from 21% to 28%; making it harder for a company to merge or acquire a foreign firm to avoid U.S. taxes; and increasing the minimum tax on multinational companies, which would make it harder for them to shield profits in low-tax countries.
The proposal is partly aimed at companies like Atlanta-based Coca-Cola, which makes use of the current system and would likely pay more under the Biden plan, said Eric Toder, institution fellow at the nonpartisan Tax Policy Center.
“This proposal would kill a lot of the incentives toward shifting money around,” Toder said. “But it would also make the company less competitive.”
Georgia’s economy has grown dramatically in the past several decades, despite recessions, fueled by the state’s logistics networks and an aggressively pro-business government. Metro Atlanta is currently headquarters for 18 of the nation’s largest companies, according to state officials.
While the economy was hammered by the pandemic, economists think a resurgence is underway. But that could be threatened by additional burdens for local business, said Kyle Wingfield, chief executive of the Georgia Public Policy Foundation.
“Companies will have to raise the cost of their goods, or pay shareholders less, or wages will not be as high as otherwise,” he said. “The idea that you can do this without having an effect is just not true.”
Some supporters of the plan argue the corporate tax hike is just a partial reversal of the 2017 tax cut and that many companies don’t pay the full tax rate anyway. Since the cut didn’t spur business investment, they say, the increase probably won’t chill growth.
More important than the tax side is the spending, said Caroline Fohlin, an economics professor at Emory University.
The proposal calls for improving the ability of companies to do business and the ability of people to work, she said. “If you repair roads, expand broadband, provide better childcare and improve schools — those are all investments that will pay back,” she said. “Yeah, there will be belly-aching. Companies and the super-rich don’t like to pay taxes, but this would improve the economy.”
Kelly Yamanouchi contributed to this story.
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