WASHINGTON—President Biden’s proposed 15% minimum tax on profitable corporations would affect far fewer companies than the version he campaigned on, according to details the Treasury Department released Wednesday.
The tax—aimed at companies that report large profits to investors but low tax payments—would apply only to companies with income exceeding $2 billion, up from the $100 million threshold used during the campaign. The Biden plan would now also let companies subject to the tax get the benefit for tax credits for research, renewable energy and low-income housing—in a recognition that the campaign-trail version could have undercut the president’s preference to encourage companies to invest in those areas.
The result is that just 180 companies would even meet the income threshold and just 45 would pay the tax, according to administration estimates that assume the rest of the administration’s plan gets implemented. Nearly 1,100 U.S.-listed companies would meet the $100 million threshold, according to S&P Global Market Intelligence. Many of them would still face sharply higher tax bills from the rest of the Biden agenda, which raises rates on domestic and foreign income.
The 15% minimum tax “is a targeted approach to ensure that the most aggressive tax avoiders are forced to bear meaningful tax liabilities,” the Treasury Department said in a new report.
The Treasury report outlines the arguments for the Democratic administration’s broader corporate tax agenda, which would raise more than $2 trillion over 15 years to pay for eight years of spending on roads, bridges, transit, broadband and other infrastructure projects.