Corporate minimum tax proposal unveiled by key Senate Democrats

U.S. Senator Elizabeth Warren (D-MA) speaks during a Senate Finance Committee hearing on the nomination of Chris Magnus to be the next U.S. Commissioner of Customs and Border Protection, at the Dirksen Senate Building on Capitol Hill in Washington, DC, October 19, 2021.

Mandel Ngan | pool | Reuters

WASHINGTON — Three Senators Elizabeth Warren, Massachusetts, and Angus King, Maine, and Senate Finance Committee Chairman Ron Wyden, Urey have released new details of a Democratic plan to trigger a minimum corporate tax of 15% on declared income for large corporations.

Senators will propose including the tax as a source of income to help fund the massive “Build Back Better” bill that Democrats are currently negotiating.

According to a statement from the senators, the minimum corporate tax Will be:

  • It only applies to companies that publicly declare profits of more than $1 billion annually for three years.
  • Create an all-inclusive minimum 15% tax on those earnings.
  • Preserve “the value of trade credits—including research and development, clean energy, and housing tax credits—and include some flexibility for businesses to carry forward losses, take advantage of foreign tax credits, and claim a minimum tax credit against regular taxes in future years.”

The tax proposal gained new focus this week after Arizona Senator Kerstin Senema announced she would not support raising the current corporate tax rate, which was the Democrats’ original plan to raise revenue for their social spending plan.

The senators said the tax would likely apply to about 200 US companies.

Democrats have not mentioned which trade credits will be held within the tax code. The details of those credits could potentially make a big difference to businesses facing the prospect of paying tax.

According to legislative language from Warren’s office, it appears that the Secretary of the Treasury will be tasked with determining which appropriations apply.

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“The country’s most profitable companies are often the worst offenders when it comes to paying their fair share. Year after year they report record dividends to shareholders and pay little or no tax. Our proposal will address the most egregious cases of corporate tax evasion by ensuring that the most horrific cases of corporate tax evasion are ensured,” Wyden said. In a statement, “Big companies pay minimum taxes.”

They specifically referred to Amazon, which they said has reported $45 billion in profits over the past three years, but paid “an effective tax rate of just 4.3% — well below the corporate tax rate of 21%.”

The proposal has yet to receive an official seal of approval from leaders of the House and Senate. But Warren said she and her colleagues “engaged extensively” with the Senate Finance Committee, the White House and the Treasury Department to develop this updated proposal for inclusion in the Building Back Better bill.

To read the legislative language, click here.

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