Stewart: What is the importance of switching to this book earning system? You mentioned that it is companies that are taking advantage of tax expenditures. (Photo by Drew Angerer/Getty Images)ĭavid D. The $737 billion bill focuses on climate change, lower health care costs and creating clean energy jobs by enacting a 15% corporate minimum tax, a 1-percent fee on stock buybacks and enhancing IRS enforcement. Kathy Catsor (D-FL) in the State Dining Room of the White House Augin Washington, DC. Joe Manchin (D-WV), Senate Majority Leader Charles Schumer (D-NY), House Majority Whip James Clyburn (D-SC), Rep. President Joe Biden (C) signs The Inflation Reduction Act with … (L-R) Sen. One under the normal corporate tax at 21 percent and one under this broader based book tax at 15 percent, and you pay whichever one is higher. Once you do that, you calculate the two taxable tax results.
Congress decided that there’s a variety of them that are worth keeping for this purpose. Then you take into account some of these tax expenditures, but not others. That’s where the corporate AMT comes in, where you start with the corporation’s book income globally, and you apply a lower rate for that, that is 15 percent. As a result, their effective tax rate becomes very low, below what Congress felt was justified. The concern that led to this was that corporations are taking too much advantage of some of these tax expenditures. That is subsidies for various corporate activities that are reflected for tax, but not for book, because the purpose of book is to accurately reflect the financial picture of the corporation. There are all kinds of differences between them, most of which have to do with various tax expenditures. As you know, American corporations essentially keep two sets of books: one for financial reporting purposes and one for tax purposes. Reuven Avi-Yonah: In general, the idea is that book income has various differences from taxable income. Stewart: Getting to the corporate AMT, could you tell listeners about how that works? Of course, the problem is that people have to start filing returns for this as early as next year, so I expect that people will have a lot of work to do.ĭavid D. I suspect that it will take the IRS several years to work out all the kinks and the right regulations and make things clear. There was a short time in the ’80s where there was something like this, but we really haven’t had too much experience with this. We will also deal with this for a while, especially the corporate AMT. I think both of the tax provisions that are included, as well as the additional funding for the IRS, will make a difference. There are areas to this day that are still unclear about it, but this is a significant change. I don’t think it’s quite at the level of the TCJA, because that included a lot of stuff and it’s taken years to deal with it and all of its complications, and we still haven’t finished yet. Reuven Avi-Yonah: It’s a significant change. Today, we’re talking about the IRA just as it’s being signed. At the time, that was the most sweeping change that we’d seen in U.S. Stewart: I talked to you a number of years ago, shortly after the passage of the Tax Cuts and Jobs Act. Cohn Professor of Law at the University of Michigan.
Joining me now to talk more about this tax and what it means for international taxation is Reuven Avi-Yonah, the Irwin I. This week, we hear from someone whose input laid some of the groundwork for the new tax. Last week, we heard from Kyle Pomerleau of the American Enterprise Institute, who highlighted a number of concerns about the tax. tax system that has inspired a lot of discussion, we thought it best to feature multiple perspectives. This bill features a new corporate alternative minimum tax to help pay for included healthcare and climate change priorities.Īs this is a major change to the U.S. On August 16 President Biden signed the Inflation Reduction Act (IRA) into law. I’m David Stewart, editor in chief of Tax Notes Today International. This transcript has been edited for length and clarity.ĭavid D. Reuven Avi-Yonah of the University of Michigan Law School discusses the new corporate alternative minimum tax and how it intersects with international taxation. Time to pay taxes, accounting, tax return, banking.
0 kommentar(er)
