On Tuesday evening, Senate Finance Committee Chair Ron Wyden (D-OR) and Sens. Angus King (I-ME) and Elizabeth Warren (D-MA) released draft legislation to impose a minimum tax on certain large corporations. The proposal is cosponsored by Sens. Michael Bennett (D-CO), Edward Markey (D-MA) and Sheldon Whitehouse (D-RI).

Proposal Details

The Corporate Profits Minimum Tax would require corporations that, for any applicable three-taxable-year period, report over $1 billion in financial statement income—also known as “book income”—to pay at least a 15% tax rate on those profits. A lower threshold of $100 million would apply to foreign-parented corporations. Adjustments are intended for various business credits, carry forward of losses and credit for prior-year minimum tax payments against regular tax in future years. The proposed would be effective for taxable years beginning after Dec. 31, 2022. 

Budget Reconciliation Pay-for

Since other revenue raisers for the Build Back Better budget reconciliation bill, such as corporate and individual rate increases, are at risk of being excluded from the package, Democrats are exploring alternatives to generate enough revenue to offset the spending in the package. 

The factsheet accompanying the Corporate Profits Minimum Tax proposal provides that it will affect approximately 200 companies and generate “hundreds of billions in revenue over ten years.” An official Joint Committee on Taxation score has not been released.