Senate Democrats on Tuesday unveiled a corporate minimum tax proposal as they search for ways to pay for President Joe Biden’s Build Back Better plan, The Wall Street Journal reports.
Democrats aimed to pay for much of the bill by partially rolling back some of the Trump tax cuts on corporations and top earners but the plan was shot down by Arizona Sen. Kyrsten Sinema, who has the power to sink the bill entirely in the 50-50 Senate.
Sinema endorsed the proposal on Tuesday.
The minimum tax is “a commonsense step toward ensuring that highly profitable corporations—which sometimes can avoid the current corporate tax rate—pay a reasonable minimum corporate tax on their profits,” Sinema said in a statement.
It’s unclear whether the proposal will actually make it into the bill and Democrats are still negotiating which parts they will leave in as they try to move toward a price tag closer to $1.75 trillion from Biden’s initial $3.5 trillion proposal.
Tax would hit 200 companies:
The tax proposal, which was introduced by Senate Finance Chairman Ron Wyden, Massachusetts Sen. Elizabeth Warren, and Maine Sen. Angus King, would apply to about 200 companies that report more than $1 billion in profits per year over three years.
The bill would create a 15% minimum tax on those profits while also preserving “the value of business credits – including R&D, clean energy, and housing tax credits – and include some flexibilities for companies to carry forward losses, utilize foreign tax credits, and claim a minimum tax credit against regular tax in future years.”
“The most profitable corporations in the country are often the worst offenders when it comes to paying their fair share. Year after year they report record profits to shareholders and pay little to no taxes. Our proposal would tackle the most egregious corporate tax dodging by ensuring the biggest companies pay a minimum tax,” Wyden said in a statement.
What about billionaire tax?
Democrats also hoped to include a tax on unrealized gains by about 700 billionaires and people who earn over $100 million per year.
Sinema expressed openness to the proposal, as did fellow holdout Joe Manchin, but the West Virginia senator now says he is not sure.
"I haven't seen the text on it,” he told reporters on Tuesday.
Some House Democrats, including Ways and Means Chairman Richie Neal, have also expressed concerns about the proposal.
Neal said the implementation would be “a bit more challenging” than his committee’s proposal to apply a 3% surtax on individuals earning over $5 million per year.
Despite Sinema’s opposition to his proposal, “our plan looks better every day,” he said.