President Joe Biden offered to fund a bipartisan infrastructure package with his 15% minimum tax proposal instead of a corporate rate increase to try and jumpstart negotiations with Republicans.
Republicans and the administration have narrowed their differences somewhat on a potential bipartisan bill after GOP negotiators agreed to increase their spending offer to $1 trillion, but the sides remain far apart on the funding options. Republicans have so far refused to entertain tax increases, particularly any increase in corporate rates. Biden appears to be offering his minimum tax on book income instead in an attempt to break the stalemate.
The Treasury “Green Book” describes his proposal as a 15% minimum tax on worldwide financial statement income for corporations with book income of more than $2 billion. Net operating losses, general business tax credits and foreign tax credits would be allowed in full. Any liability could be carried forward and used against regular tax as a credit in future years.
It is not clear whether Biden would seek to expand this minimum tax to corporations below the $2 billion threshold as part of a bipartisan agreement. The administration is also currently proposing at least a 15% rate for a broader international agreement on a global minimum tax with the Organization for Economic Cooperation and Development (OECD).
A bipartisan agreement on infrastructure without an increase in the corporate rate would not necessarily take it or other tax increases off the table. Democrats could try a two-track approach, agreeing on a smaller bipartisan package with Republicans while moving tax increases and other partisan priorities separately on a reconciliation bill. Democrats, however, could have trouble keeping their caucus together on a separate partisan package that doesn’t carry the most popular physical infrastructure investments.
Washington National Tax Office
+1 202 861 4144
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.