After recent passage of the $1.9 trillion American Rescue Plan designed for pandemic relief, President Biden has now turned attention to his infrastructure plan.

Today, he unveiled his $2 trillion American Jobs Plan designed to address a wide range of infrastructure-related items, primarily paid for by higher corporate taxes. While the final package is subject to the usual give-and-take of Washington, discussed below are some of the major spending items and tax increases and potential market impacts.

The proposal will cost about $2 trillion over eight years and would be paid for over 15 years, primarily by raising the corporate tax rate to 28% from 21% and increasing taxes on companies’ foreign earnings.

The increase in the statutory tax rate on domestic income from 21% to 28% would primarily affect companies with high domestic business exposure and effective rates close to the statutory rate, which were the primary beneficiaries of 2017’s corporate tax cuts. In sector terms, this includes domestically oriented Financials, Industrials, and many Consumer firms.

The Technology sector has been able to reduce its tax bill through its major global presence and has the most at risk for higher potential taxes on foreign profits. The Health Care sector, primarily international drug and device manufacturers, is also a major beneficiary of low foreign profit taxes and is at relatively greater risk for higher foreign profit taxes. Domestic-facing firms are obviously at lower risk of higher foreign profit taxes.

The plan calls for $447 billion (BN) in transportation infrastructure to fix highways, rebuild bridges, upgrade ports, airports, and transit systems. There is $111 BN for improving drinking water and related infrastructure, $100 BN for improving and broadening the reach of advanced communication systems (broadband), $100 BN for modernizing power generation and the electrical grid for clean energy.

There is $300 BN for revitalizing and strengthening the manufacturing supply chain, $180 billion for advancing U.S. leadership in critical technologies and upgrading research infrastructure, and $174 BN for electric vehicles. There is also $213 BN for green and affordable homes.

The traditional infrastructure investment will likely benefit industrial and materials companies, while the emphasis of the proposal on green investment likewise should benefit renewable energy companies. Metal and mining firms should benefit from the substantial material requirements for the movement toward alternative energy and electric vehicles and green homes.

Utilities stand to benefit from increased investment in water and clean energy infrastructure. Many Communication Services and Technology firms will likely benefit from increased investment in broadband.

Please see our 2020 special reports, The Case for Infrastructure Spending and 5G Technology Investment Implications, for additional detail on infrastructure, clean energy, and advanced communication investment implications, which are all major components of Biden’s proposal.

The legislative process is fluid and the spending and tax plans could change in the coming months. We will provide further updates as this process unfolds.

Meanwhile, we remain positive on our outlook for the economic recovery from the pandemic. Leading economic indicators remain encouraging while the accelerating vaccine rollout should allow for a full reopening of the economy in the coming months. There is significant pent-up consumer demand, which we see being released as the economy reopens.

The recovery is being supported by late December’s $900 billion stimulus, the recently passed $1.9 trillion American Rescue Plan, and should ultimately be further bolstered by this just-announced $2 trillion American Jobs Plan.

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