One of the biggest revenue raisers in Democrats' latest health care and climate change spending bill is a new minimum tax on companies book income, but the levy will hit some industries harder than others.
Senate Majority Leader Chuck Schumer, D-N.Y. and Sen. Joe Manchin, D-W. Va., would impose a 15% minimum on corporations based on profits they publicly report on their financial statements to shareholders. The tax would only apply to companies with more than $1 billion in income.
The levy would affect around 200 of the country's largest corporations with profits over $1 billion that pay less than the current 21% rate for businesses, according to Democrats.
The tax would generate about $313 billion in new revenue over the next decade, according to Schumer and Manchin. The tax would be disproportionately borne by certain industries because of a number of carve-outs, according to an analysis of the proposal by the nonpartisan Tax Foundation, which advocates for lower taxes.
Under the book tax minimum, the real estate, rental, and leasing industry would have the heaviest burden, with a net tax hike of 12.7%. It would be followed by mining, which faces a 4.6% tax hike.
The industries that would account for the largest book minimum tax liabilities are manufacturing $65.9 million and finance, insurance and management $39.4 million. These industries see a sharper impact because they are at the intersection of the different book tax gaps targeted by Congress.
The tax incentives created by Congress, such as bonuses and special items that show up in one income definition but not the other, are what lawmakers are looking at to go after permanent discrepancies between the two measures from firms that are low taxes, but the proposal will affect businesses with temporary timing differences between financial and taxable income, and special items that show up in one income definition but not the other, the Tax Foundation said.