Goldman has a crack:
- The Treasury has released a new more detailed description of its corporate tax proposals. They are in line with the outline from the White House last week, but include a few new details related to the treatment of foreign income and the minimum tax on book income.
- Overall, Treasury estimates the proposal would raise around $2 trillion over 10 years. Compared to the CBO’s projection of total corporate profits, this would represent an increase in the effective corporate tax rate of 7pp.
- The net increase by company would vary substantially from this for two reasons. First, the White House is also proposing substantial tax incentives for specific activities—manufacturing, R&D, infrastructure, housing, and clean energy to name a few—many of which would go to corporations.
- Second, around 60% of the gross tax increase the Treasury proposes relates to more heavily taxing the foreign profits of multinationals at rates similar to the current 21% domestic tax rate. The proposals would also tax the US profits of foreign multinationals more heavily.
- These details are very likely to change. Senate Democrats have already released their own proposal, though it follows the same general outline. More importantly, some centrist Democrats have already suggested they prefer as maller corporate rate increase.
- The Treasury’s report is silent on the timing of tax increases, but we think a retroactive tax hike is very unlikely. Budget rules require long-term offsets to new spending, but not in the near-term, and we expect that retroactive tax increases would reduce political support for the next fiscal package.
Great stuff to my mind and much of it will get through the budget reconciliation process as well. All of those fake left dills obsessing over race and gender need a long cold shower of Biden class warfare.
