TAXING BOOK INCOME TO PAY A FAIR SHARE

Taxing book income to pay a fair share. The recently passed Tax and Climate Legislation that was signed by President Biden, will change how the largest Corporations in America are taxes. It amounts to a corporate minimum tax, and has the potential to raise billions when the income to the Treasury is needed to pay down the debt and pay for other services. Corporations have been reporting a profit to their shareholders, but at the same time increasing the deductions they have to lower tax bills. When you tax book income instead, you end up paying a larger share of your income into the tax system. The 15 percent tax would apply to all corporations that have more than $1 billion in book income, that gets reported to the shareholders of the corporation. Different estimates have stated that it will likely raise between $250 billion upwards of $320 billion. Taxing book income to pay a fair share.

The U.S. Treasury will have to make new regulations and give guidance going forward, to enact the new tax laws, and that will create some confusion initially. But that is par for the course with new Tax Legislation. Just because it causes some discomfort for a few companies for a period of time, should be a reason not to go forward, as the revenue raised will be helpful to the economy at a critical time, given the Covid expenses and potential recession.

Deputy Secretary for Tax Policy at the Treasury Department, stated that if companies are using record profits and have low taxes, then they are scheming the system and the best way to deal with that is to base those companies taxes on book income. Using that will amount to them paying a minimum tax on the record profits that many of those same companies reaped during the pandemic.