FAST FIVE: "Clear Focus On Foreign Income": Full Breakdown Of The Treasury's Corporate Tax Proposal

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The proposals are in line with the outline from the White House last week, but include a few key details related to the treatment of foreign income and the minimum tax on book income.

A $2 trillion rise in gross corporate taxes would represent a 7% increase off of that base.

The Administration proposes three changes: repeal the 10% return on capital; tax 75% of foreign profits rather than 50%; and apply the system on a country-by-country basis to better isolate profits in low-tax jurisdictions.  Treasury estimates this would raise $500bn in revenue in excess of the revenue from the current policy.

This is likely to increase the tax on GILTI that intellectual property-intensive industries already pay, but is also likely to affect other industries not currently affected by GILTI due to the exclusion of profits on physical capital and/or the aggregation of profits across countries.

The effect was to produce a bill that JCT estimated to raise the deficit substantially in the first several years but not at all over the long run (i.e., after the 10-year period Congress uses).

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