Let’s talk about the corporate alternative minimum tax.
A massive corporate tax cut is the Republican tax overhaul’s entire reason for being. It is the star around which the rest of the plan orbits.
But Senate Republicans, in a frantic rewrite of their tax bill late last Friday, appear to have screwed it up. Kind of. At least for now.
The price tag for the apparent mistake, added hastily in a late-night, partially handwritten draft, is $250 billion or more, according to some rough outside estimates. Businesses are furious. Correcting the Senate’s error is expected to be priority No. 1 as House and Senate members start negotiating a final tax package this week.
But this episode is a potent reminder of how haphazardly this once-in-a-generation tax rewrite was put together before the Senate passed it, and the enormous consequences of such a freewheeling approach.
If Republicans struggle or, worse, fail to correct their error, they risk undermining the entire internal logic of their bill: that this dramatic, permanent corporate tax cut will kick-start the economy, lifting up all Americans as the benefits trickle down.
The whole kerfuffle is over the corporate “alternative minimum tax” or AMT. The issue is really wonky, but it also undergirds the very foundations of the Republican plan.
The corporate alternative minimum tax, explained
This is a separate tax calculation under current law, used to make sure that businesses are forced to pay at least a base level of federal taxes and can’t totally avoid taxes by taking various deductions and credits. Few businesses pay it currently, because their regular rate is usually higher than the AMT rate, which works out to about 20 percent.
The Senate bill, like the House bill, originally repealed it entirely while slashing the regular corporate tax rate from 35 percent to 20 Read More Here