December 7, 2021
White House insists corporate tax hike still on the table in spending bill

Biden’s minimum book tax would hit these industries the hardest, analysis shows

Democrats have proposed a minimum tax on revenue that well-off firms report back to traders with a view to assist fund President Biden‘s sweeping tax and spending package deal.  

The proposed minimum book tax would impose a 15% minimum on firms based mostly on income they publicly report on their monetary statements to shareholders. The levy would solely apply to firms that reported greater than $1 billion in revenue for 3 straight years.  

It would protect “the value of business credits – including R&D, clean energy, and housing tax credits – and include some flexibilities for companies to carry forward losses, utilize foreign tax credits, and claim a minimum tax credit against regular tax in future years,” in response to the three Democrats – Elizabeth Warren of Massachusetts, Angus King of Maine and Ron Wyden of Oregon – who proposed the tax. 

The Congressional Funds Workplace decided final week that the book tax would generate about $319 billion over the subsequent decade, which would go towards paying for Biden’s social spending and local weather change plan. 

However a new analysis by the nonpartisan Tax Basis shows how the measure would have a disproportionate impact on sure industries.

The coal business would face the heaviest burden beneath the book tax minimum, seeing a internet tax hike of seven.2% of its pre-tax book revenue. That would be adopted by vehicle and truck manufacturing, which faces a 5.1% tax hike. In greenback phrases, the industries that would account for the largest book minimum tax liabilities are utilities ($43.3 billion) and communication ($30.6 billion). 

These industries see a sharper affect as a result of they’re at the intersection of the totally different book tax gaps focused by Congress. Lawmakers want to go after everlasting discrepancies between the two measures from corporations paying low taxes however the proposal will extra severely have an effect on companies with non permanent timing variations between monetary and taxable revenue; deliberate tax incentives created by Congress (resembling bonus depreciation); and particular gadgets that present up in a single revenue definition however not the different, the Tax Basis stated.

(Photo by Timothy A. Clary-Pool/Getty Images)

“The book minimum tax affects industries very differently, some of which may be unintended, reflecting a tax proposal that has not been fully vetted,” the Tax Basis wrote in its analysis. “Before introducing a new tax on book income, and asking the IRS to administer it and taxpayers to comply with it, lawmakers should consider whether these disparate impacts by industry are consistent with their tax policy goals.”

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