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