Democrats are going after tax avoidance from big companies and wealthy individuals as the debate on taxes heats up ahead of tax code expirations scheduled for next year.
A new set of proposed rules from the Treasury Department is taking aim at corporations with profits more than $1 billion, while Senate Finance Committee Democrats last week called out strategies wealthy people use to get around their tax liability.
The Treasury Department said Thursday it was proposing new rules on the corporate alternative minimum tax (CAMT), a powerful and complicated section of the tax code that runs parallel to the main corporate tax laws, news that has some big accounting firms sounding nervous.
The rules would activate that parallel track, requiring corporations with more than $1 billion in profit to pay a 15 percent minimum tax. Without the new rules, the companies would have paid an effective federal tax rate of just 2.6 percent on average, the department said.
The Treasury Department estimates the new rules will bring in $250 billion over the next decade, helping to chip away at the tax gap, which is the amount the government is owed in taxes every year but doesn’t collect. The 2021 tax gap was around $700 billion.
Public comments on the newly proposed rules will be accepted through Dec. 12, and a hearing is scheduled for Jan. 16.
“The proposed rules released by the Treasury today are an important step toward realizing Congress’ efforts to address the most egregious U.S. corporate tax avoidance and ensure the largest and most profitable corporations in the country cannot pay little to no taxes,” Treasury Secretary Janet Yellen said in a statement.
Estimates from the Joint Committee on Taxation in 2022 put the revenue figure from the CAMT slightly........