A recent study by the Joint Committee on Taxation found the corporate minimum tax proposal from Democrats would result in nearly 50% being paid by manufacturers. | Josh Beech/Unsplash
A recent study by the Joint Committee on Taxation found the corporate minimum tax proposal from Democrats would result in nearly 50% being paid by manufacturers. | Josh Beech/Unsplash
Democrats are proposing a minimum corporate tax when many manufacturers are struggling with an impending recession amid inflation and supply-chain disruptions, according to new analysis results from the nonpartisan Joint Committee on Taxation (JCT).
The analysis suggests that half of the $313 billion minimum tax increase would be borne by manufacturers in Michigan and across the nation.
“The JCT confirmed what we have been saying for over a year: this fundamentally flawed proposal, which has not been properly vetted by either congressional tax-writing committee, risks severely harming American manufacturers, exacerbating supply-chain disruptions, and ultimately costing U.S. jobs and investment," Senate Finance Committee Ranking Member, Mike Crapo (R-Idaho) said.
Crapo said the proposal is essentially, a domestic manufacturing tax.
“Now is not the time to resurrect a harmful policy that would overwhelmingly hit American manufacturers and supply chains, as well as undercut critical research and development and investment in emerging technologies, he said.
The Democrats’ latest tax-and-spend bill places a 15% minimum tax on corporations, according to a release from the United States Senate Committee on Finance. If it becomes law, the proposal will raise companies’ tax bills until they reach that minimum rate. According to an analysis performed by the JCT, 49.7% of the minimum tax would be endured by the manufacturing industry.
The plan would affect approximately 150 companies annually and raise about $313 billion over a decade, according to the JCT.
The committee also suggested the minimum tax would not close tax loopholes. Tax depreciation rules were intentionally designed by Congress to support domestic investment, the committee said. This tax on U.S. manufacturers would eliminate that benefit.
The minimum-tax proposal is part of an agreement reached last week by Senate Majority Leader Chuck Schumer (D., N.Y.) and Sen. Joe Manchin (D., W.Va.), the Wall Street Journal reports. The bill, which Schumer is trying to get all 50 members of the Senate Democratic caucus to back, raises money for healthcare spending and climate-change initiatives.
According to Industry Select, among the top 10 manufacturing companies in Michigan, which are likely to be affected by the tax-and-spend bill are, Stellantis US, LLC, Nexteer Automotive, Gentex Corp., Amway Corp., General Motors, and Ford Motor Company.
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