Top House Republicans are slamming a last-minute addition to the Senate tax bill that has drawn the scorn of corporate America.
In its frantic push to win votes for its tax plan on Friday, Senate Republicans added back a corporate alternative minimum tax, which a separate House plan would eliminate along with an individual AMT. The provision, which helped the Senate to offset the cost of other tax breaks in its plan, has now emerged as a sticking point as the chambers get set to work toward a joint, final bill.
“I think that both the individual and the corporate AMT — it’s costly, it’s complex — really on the business side, undermines many of the pro-growth and pro-American provisions in the tax code,” Rep. Kevin Brady, R-Texas, who is set to lead the House and Senate conference committee, told CNBC’s “Squawk Box” on Tuesday.
On Monday, House Majority Leader Kevin McCarthy, R-Calif., told CNBC that “I think [the corporate alternative minimum tax] has to be eliminated because that would destroy [research and development.” The tax “should be eliminated for sure,” McCarthy added.
The corporate AMT aims to make corporations pay a minimum tax if the tax breaks make their burden too low. It is currently set at 20 percent, and some corporations pay the higher rate after calculating their tax obligations under both the standard corporate structure and the AMT.
Since Republicans want to chop the corporate rate to 20 percent from 35 percent, the corporate AMT could affect numerous companies under the proposal, according to The Wall Street Journal. Opponents of the tax argue that it unnecessarily complicates the tax process.
Reinstating the measure saved about $40 billion under the Senate bill, according to the congressional scorekeeper Joint Committee on Taxation. The money helped to pay for provisions like limited state and local tax deductions and a higher pass-through income deduction designed to win over multiple holdout senators.
The House Republican leaders’ comments came as American companies mount a furious push against the corporate AMT, according to the Journal. McCarthy and pro-business groups argue that keeping the tax will deter research and development and investment in industries like technology and banking.
“Retaining the AMT in reform is even more harmful than it is in its present form — among other things, it eviscerates the impact of certain pro-growth policies like the R&D tax credit and exacerbates the international anti-abuse rules,” Caroline Harris, chief tax counsel for the powerful U.S. Chamber of Commerce, wrote on Monday. “This cannot be the intended impact from a Congress who has worked for years to enact a more globally competitive tax code.”
Republicans hope to strike a deal and approve it in both the House and Senate before Christmas.