Senate Democrats today unveiled a proposed 15% minimum tax on corporate earnings as they seek a compromise on President Biden’s “Build Back Better” agenda.
Three senators—Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), and Angus King (I-Maine)—rolled out the proposal Tuesday as a potential source of revenue for the White House’s multi-trillion-dollar social spending plan. That plan has been the subject of much debate and dissension within the President’s own party in recent months, as centrist senators like Joe Manchin (D-W.Va) and Kyrsten Sinema (D-Ariz.) have balked at certain spending and tax proposals.
But the corporate minimum tax plan appears to already have found traction among reluctant lawmakers, with Sinema tweeting on Tuesday that it “represents a commonsense step” in negotiations over Biden’s agenda. Warren also tweeted about the proposal, targeting Amazon in particular in noting how it would “stop [corporate] giants from paying $0 in taxes after raking in massive profits.”
In outlining the 15% corporate minimum tax plan, the senators said that it would only apply to companies that publicly report more than $1 billion in annual profits, on average, over a three-year period—with only around 200 total American corporations impacted. They also said that it would preserve business credits for those companies that promote investments in research and development, clean energy, and affordable housing, while also providing some flexibility for corporations to carry forward losses and account for foreign taxes paid.
The senators’ proposal comes in the wake of opposition by Sinema to hiking the current U.S. corporate tax rate, which stands at 21%. Congressional Democrats had eyed raising that rate, which was slashed from 28% under the Trump administration’s 2017 Tax Cuts and Jobs Act. Democrats have also floated taxing billionaires’ unrealized capital gains in their efforts to raise revenue for Biden’s spending plan. The 15% minimum corporate tax would also be separate from a proposed 15% global minimum tax, which the White House has pitched as a way to prevent companies from shifting their earnings to low-tax countries overseas.
Whatever new taxes are included in the President’s “Build Back Better” plan, they’ll need the support of every Democrat in a closely-divided U.S. Senate. Senate Republicans are in unified opposition to the plan, meaning that Democrats must pass Biden’s economic agenda through a process known as budget reconciliation. While that allows them to enact legislation via a filibuster-proof simple majority, it requires the support of all 50 senators who caucus with the Democrats—hence the need to keep centrists like Sinema and Manchin onboard.
House and Senate leaders had yet to comment on the corporate minimum tax plan as of Tuesday afternoon—though Warren said that she, Wyden, and King have “engaged extensively” on the proposal with the White House, Treasury Department, and Senate Finance Committee, which Wyden chairs. But like the President’s “Build Back Better” bill at large, it remains to be seen what the final corporate minimum tax proposal looks like and how much support it has among Congressional Democrats.
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