“ How Would Enacting the Bill Affect Inflation in 2022 and 2023?
In calendar year 2022, enacting the bill would have a negligible effect on inflation, in CBO’s assessment. In calendar year 2023, inflation would probably be between 0.1 percentage point lower and 0.1 percentage point higher under the bill than it would be under current law, CBO estimates. That range of likely outcomes reflects uncertainty about how various provisions of the bill would affect overall demand and output, the supply of labor, the persistence of disruptions in the supply of goods and services, and how the Federal Reserve would respond to offset any increase in inflationary pressure. Responsiveness to the enhancement of health insurance subsidies established by the Affordable Care Act is the most important factor boosting inflationary pressure, and responsiveness to the new alternative minimum tax on corporations is the most important factor reducing inflationary pressure. The range applies to multiple measures of inflation: the GDP price index, the personal consumption expenditures price index, and the consumer price index for all urban consumers.“
“ JCT has projected that approximately 150 corporations would be subject to the new tax each year and that just under half of the revenues would come from the manufacturing sector.”
“ In CBO’s assessment, the proposed new corporate minimum tax would reduce the incentive for those large corporations to invest, primarily by limiting the tax benefit of accelerated depreciation and by decreasing the after-tax return on their new investment. According to the generally accepted accounting principles that are used for preparing financial statements, firms must deduct the cost of investments over the full useful life of the asset. In contrast, various provisions of the tax code—including “bonus” depreciation—allow firms to deduct investment expenses more quickly, increasing the tax benefit of those deductions and the expected after-tax return on the investments. By setting a new minimum tax, section 10101 would limit the tax benefit of accelerated depreciation for affected corporations and, all else being equal, reduce their business investment.”
https://www.cbo.gov/system/files/2022-0 ... Graham.pdf
This preceded the senate activities over the weekend. I haven’t seen the final info on the corporate tax issue but read in the times that Sinema was able to get most of the capital expenditure benefits restored. So no to a big impact on the manufacturing companies among the 150. So 150 out of 1.7 million C Corporations. Personally, if they aren’t paying taxes because of capital expenses, I’m good with that.
C Corporations generate 6% of overall tax revenues.
And then there’s the scale involved. An article in the NYT this morning identified a the corporate minimum tax would generate $258 billion over 10 years. So $25.58 billion a year. The irs takes in $4.1 trillion. So that’s an increase of .0061%. And top tier accountants and tax experts wil find ways around it. Waste of time.
I’ve read several pieces and the consensus is that the deficit reduction will be in the $10 to $30 billion range per year. Big whup. After the Sinema changes expect less.
The Medicare pharmaceutical thing doesn’t kick in until 2026. And then only 10 drugs. Eventually it goes up to 20 drugs.
Not particularly impressed with this.
About the only thing I’m sure of is the dollars the 1% surcharge on stock buy backs will generate.