Biden’s 15% Minimum Tax Rate
In April, President Joe Biden proposed an increase to the corporate tax rate. His “Made in America” tax plan proposed raising the corporate tax rate as high as 28%, and the generated revenue would fund the administration’s $2 trillion infrastructure plan.
Republicans opposed the initial tax hike, and during negotiations Thursday, Biden conceded and offered to cancel his plans to raise the corporate tax rate to 28%. Instead, the President proposed a 15% minimum tax rate that aims to ensure that all businesses pay their fair share of taxes. What would Republicans have to give in return? Sources familiar with the matter say Republicans would have to agree to at least $1 trillion in new infrastructure spending.
With the new tax floor, funding for Biden’s $2 trillion infrastructure plan would rely heavily on increased tax enforcement by conducting more audits of wealthy taxpayers. Additionally, the new proposal seeks to stop large, global companies from paying little to no taxes in the United States.
Currently, many of these companies report huge profits on their financial statements but move their tax burden to nations with lower taxes. The new plan would end years of differences in how companies compute their tax liabilities, limiting the number of legal tax loopholes that companies can take advantage of.
Critics of Biden’s proposal have said that imposing a 15% minimum tax on corporate profits would discourage companies from spending money on endeavors that Congress wants to support, such as R&D or clean energy, because they wouldn’t be able to claim those tax incentives.
What do you think about the 15% tax floor?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.