Is Corporation Book Minimum Tax an Optimal Government Revenue?
(Source) The Inflation Reduction Act imposed a 15% minimum tax based on an entity’s net income (subject to a $1 billion gross receipt threshold) presented on its financial statement. The payment of such tax (amount in excess of ordinary tax liabilities) will become tax credits. These tax credits can be carried forward to offset future regular corporate tax liabilities to the extent the tax liability is not below the minimum tax. Under the earlier version of the minimum tax provision, the Modified Accelerated Cost Recovery System significantly increases the temporary difference in cost recovery on certain industries’ tax books and financial statements. Businesses with a higher proportion of fixed depreciable assets would likely be subject to significant tax hikes once the minimum book tax is implemented. In addition, this tax regime might potentially undermine the current administration’s policy objectives, such as affordable housing, green energy, infrastructure, increasing [read more]