The biggest American corporations would have to pay taxes equal to at least 15% of their income under a new regulation that the Biden administration proposed on Thursday.
According to Treasury Department officials, a clause in the administration’s 2022 Inflation Reduction Act would require roughly 100 of the largest firms, defined as those with yearly profits of at least $1 billion, to pay more taxes.
Massachusetts senator Elizabeth Warren is among the Democratic members of Congress who have pushed the White House to enact the tax.
The corporate alternative minimum tax (AMT) aims to prevent big businesses from using tax breaks and loopholes to avoid paying little or no taxes on substantial profits, much as the AMT which mostly affects wealthy individuals.
Laptops 1000According to the Treasury Department, the tax is a fundamental component of the administration’s “agenda to make the biggest corporations and wealthiest pay their fair share.”
On Thursday, Treasury officials announced that over the next ten years, the AMT would generate $250 billion in tax revenue.
In the absence of it, according to Treasury estimates, the top 100 businesses would only pay 2.6% of their income in taxes, with 25 of them not paying any taxes at all.
If he is elected, former President Donald Trump has pledged to abolish the corporate AMT.
In 2017, while serving as president, Trump signed legislation lowering the corporation tax rate from 35% to 21%. He now claims that he favors bringing the corporation rate down to 15%.
Warren and three congressional colleagues highlighted data this summer in a letter to Treasury Secretary Janet Yellen, stating that five years after Trump’s corporate tax cut, 55 major firms claimed $670 billion in earnings, but paid less than 5% in taxes.
The Treasury Department announced that comments on the proposed rule may be made until December 12 and that a hearing on the regulation is scheduled for January 16.
