Here at Dealbreaker, we don’t exactly have a perfect record in predicting the success of slapdash rewritings of the tax code, at least in Congress. So in spite of the support of the mercurial Kyrsten Sinema for this one, well, we just have a bad feeling.
Senate Democrats announced a 15% minimum tax on large companies’ income on Tuesday, winning support from a key moderate lawmaker, as they try to generate enough money to pay for President Biden’s social-spending and climate-change agenda…. Manufacturers and tech companies could be among those hardest hit by the plan, because the tax breaks they currently benefit from, such as expensing capital investments or stock options, would effectively be limited…. Affected companies would still receive the benefit of a range of tax credits available to businesses, including breaks for spending on research and development, affordable housing and clean energy initiatives that would let them push their tax rates below 15%. Those exceptions could mean that some profitable companies could still report zero tax bills.
The Wyden plan would impose a one-time tax on unrealized gains to date, and then create an annual tax on each billionaire’s gain in net worth. The proposal is expected to address losses, illiquid assets and enforcement. The plan is expected to require annual taxes on publicly traded assets, even if they aren’t sold. Illiquid assets would likely be taxed when sold, but with an added charge to make up for the ability to defer the tax.
Here’s the potential problem: The Constitution gives Congress broad powers to impose taxes, but also restricts how taxes can be imposed. It includes a requirement that “direct taxes”—a term without a clear definition—be apportioned among the states, such that each state’s residents pay a share of the tax payments that is equal to its share of the population.
It's almost as if this isn’t the best way to run a country and the fundamental structures of American governance are irreparably broken.
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