Legislation

Big companies look to Senate to ease budget bill’s minimum tax – Roll Call

The Joint Committee on Taxation estimates the minimum tax would generate $318.9 billion over a decade, making it the largest single revenue raiser included to help pay for the expansive spending package. It would only apply to corporations reporting income of more than $1 billion on annual financial reports to shareholders. If those companies owe a tax rate of less than 15 percent, the alternative minimum tax would kick in.

As written, it offers some exemptions to ease the sting. General business credits, like those for R&D, housing and renewable energy, can offset up to about three-quarters of the total tax owed, including the extra minimum tax, and companies would get some credit for foreign taxes they pay. Net operating losses starting with the 2020 tax year, when COVID-19 ravaged the economy, can be carried forward to offset taxable income to some extent.

Pension problems

Still, some business groups say Democrats should provide more exemptions or risk undermining some of their other goals.

The American Benefits Council, a trade group representing some of the largest U.S. companies, such as Apple and Exxon Mobil, is calling for Democrats to allow exemptions from the tax related to defined benefit pension plans.

Lynn Dudley, senior vice president of global retirement and compensation policy for the group, said in an interview that the tax should allow deductions for pension plan contributions and exempt any corporate earnings related to pension plans that could otherwise be counted as taxable income.


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