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Fewer potholes and disruptions in rail traffic add up to US economic activity over the years and encourage further private sector investment.

The projected increase in GDP and the simultaneous reduction in national debt, albeit modest, is likely welcome news for the Democrats and Republicans who brokered the deal with the White House.

The entire package, approved by the bipartisan senatorial group and the Biden administration, approves spending of $ 1.2 trillion over the next five years. The additional $ 579 billion includes more than $ 300 billion for transportation projects, while $ 266 billion would be allocated to investments in digital, disaster, environmental and energy infrastructure.

Biden is in the middle of a road show promoting the plan and told the Wisconsin crowds Tuesday that it will “change the world for families” in Badger State.

The deal will “ensure” [high speed broadband] is available in every American household, including the 35% of rural families who currently forego it, “he added. The president is expected to travel to Michigan this weekend to further praise the deal.

Still, Biden’s transnational mission to generate support for the measure underscores the fragility of even bipartisan efforts to repair the country’s transport infrastructure. The president himself nearly doomed the deal last week when he said he would veto the infrastructure bill if it were not passed along with a larger bill backed entirely by Democrats.

He later withdrew from that promise when it became clear that the comments had angered Republicans.

The latest Wharton study comes months after the school analyzed the Biden government’s first infrastructure proposal, called the American Jobs Plan. This original plan included spending approximately $ 2 trillion over eight years and was estimated by Wharton to reduce economic output by 0.8% in 2050.

When asked why the bipartisan plan would increase GDP over the next 29 years while the original Biden plan would not, Huntley stated that the latest legislation does not include changes to the corporate tax rate and no minimum tax on book income.

By removing corporate tax hikes in the bipartisan plan, legislators have reduced negative tax distortions that would ultimately have reduced corporate investment incentives and household savings incentives.

The proposed increase in the corporate tax rate in President Joe Biden’s landmark infrastructure plan will not result in a significant reduction in corporate investment, according to a new study by the University of Pennsylvania’s Wharton School.

Of greatest interest to Wall Street is Biden’s plan to increase the corporate tax rate from 21% to 28%, which would amount to partially reversing former President Donald Trump’s 2017 tax cuts.

Wharton estimates that increasing the corporate rate to 28% from 2022 to 2031 would generate an additional $ 891.6 billion and, possibly surprisingly, would have little impact on corporate investment in the short term.

The school said this is because companies with significant capital investments may postpone a tax incentive called bonus write-offs until years when the Biden increases could take effect.

Bonus write-offs allow companies to deduct a large portion of the purchase price of certain assets, such as capital goods, immediately instead of having to write down their value over several years. Trump’s 2017 tax cuts doubled the bonus write-off deduction from 50% for qualifying properties to 100%.

“An increase in the statutory corporate tax rate is expected to increase corporate investment in the short term,” the Wharton researchers wrote. “Under the current accelerated depreciation regime, the marginal effective tax rates on corporate investments are low regardless of the key interest rate. As a result, an increase in the corporate tax rate does not have a material impact on the normal return on investment, but tax rents and returns on existing capital.”

Neither the White House nor the Treasury Department immediately responded to CNBC’s request for comment.

Still, Wharton found that the negligible to positive impact of a rate hike on businesses would be offset if Congress approved the American Job Plan’s minimum tax on book income, which would reduce the value of depreciation.

The infrastructure plan marks Biden’s first detailed tax proposal since he took office earlier this year. The mammoth plan is expected to see significant changes as it makes its way through Congress, where Republicans agree in their opposition to the tax hike.

Democrats who choose to pursue the infrastructure plan via a budget vote will need almost unanimous support from their caucus to pass it without GOP support. But Democratic support also remains in question after Senator Joe Manchin, DW.Va., made it clear earlier this week that he’s not a fan of increasing the corporate rate to 28%.

The Biden plan would reduce the federal debt

The school’s most recent study, released Wednesday morning, also found that the American government’s employment plan will generate $ 2.1 trillion in tax revenue and spend $ 2.7 trillion in spending between 2021 and 2030.

By 2050, the proposed tax increases and repairs to American infrastructure will reduce US debt by 6.4% and GDP by 0.8% in 2050 from current law.

“First of all, the federal debt will rise by 1.7 percent by 2031 because of new spending in the [American Jobs Plan] exceeds the new revenue generated, “wrote the researchers.” However, after the new editions of the AJP end in 2029, their tax increases will persist – as a result, the federal debt will decrease by 6.4 percent by 2050 compared to the current legal basis. “

The relatively modest decline in economic growth through 2050 is in large part due to the fact that infrastructure improvements will allow Americans to be more productive in the years to come, the school said.

Repairing transportation infrastructures can, for example, help increase productivity in the long term if US workers spend less time in traffic or commuting around a vulnerable bridge.

“Public investments include new spending on transit infrastructure, research and development, and supply chains for domestic manufacturing,” the researchers wrote. “These are seen as investments in ‘public capital’ that increase the productivity of private capital and labor.”

On the revenue side, the Wharton School noted that the American employment plan would be funded through a combined increase in corporate tax rate, a minimum tax on corporate book income, an increase in the tax rate on foreign profits, and the elimination of tax breaks for fossil fuels.