Leading Democratic senators introduced legislation on Tuesday that would impose a 15% minimum tax on multi-billion dollar U.S. companies. The funds raised will be used to fund President Joe Biden's social policy and climate change initiatives.
Senator Elizabeth Warren and Senate Finance Committee Chairman Ron Wyden, both Democrats, as well as Senator Angus King, an independent who caucuses with the Democrats, put up the plan as part of a two-pronged legislative effort to curb tax evasion by large companies and billionaires.
The corporate minimum tax is aimed at public and privately held businesses with a yearly income of more than $1 billion over a three-year period.
The legislators claimed it would be compatible with the corporate minimum tax agreed upon by 136 countries, which is aimed at companies that pay little or no tax by exploiting the international tax system.
Wyden said that the new legislation will ensure that corporations "pay their fair share" and that no company will be exempt from paying taxes. The new corporation tax would apply to about 200 companies and raise hundreds of billions of dollars over a ten-year period.
Wyden also plans to propose a new "billionaire's tax" legislation that would tax those with unrealized assets worth more than $1 billion and a yearly income of $100 million for three years in a row.
The White House expressed support for the idea, stating Biden would keep fighting for it to be included in his "Build Back Better" plan. The three congressmen also anticipated that the 50-member Senate Democratic caucus, which includes moderate Senator Joe Manchin, will rally behind them.
However, Democrats in the House of Representatives may object to the proposals, particularly the controversial billionaire's tax, since they prefer more straightforward tax rises for companies and affluent individuals to pay for Biden's plan.
Senator Kyrsten Sinema, a Democrat who had initially opposed boosting the corporate tax rate, praised the plan released on Tuesday. She called it a "common sense" move towards ensuring that extremely wealthy businesses pay a "fair minimum corporation tax" on their profits.
The new tax legislation is seemingly a compromise to the initial proposal to raise corporate taxes and personal income taxes to fund Biden's big spending plans. Sinema's resistance to increase corporate tax also played a part in swaying Democrats' tax ideas.
