As the presidential race enters its final stretch, Vice President Kamala Harris promises a new direction. Unfortunately, she has already signed onto some of President Biden’s worst tax policies and will likely carry the torch as these policies continue to hurt taxpayers and the economy.
In stark contrast to the Trump administration’s emphasis on cutting regulations and reducing the size of the federal government, the Biden administration has made the administrative state bigger than ever. Biden’s tax policies are the latest example of this trend, with one of his signature taxes being so large and confusing that the Department of the Treasury recently published 600 pages of regulations to attempt to explain it. The corporate minimum tax that is covered by the recent regulation was part of the Inflation Reduction Act, signed into law two years ago after a crucial tie-breaking vote from Vice President Harris.
When the corporate minimum tax was first proposed, it was estimated to raise tax revenue and correspondingly cost businesses $313 billion over ten years — an amount that has now been revised down closer to $200 billion. This reduced revenue estimate is largely due to an amendment passed during debate to exempt some businesses from the tax, but the lost revenue would have been made up for by a provision relating to state and local tax deductions. Again, Vice President Harris’s tie-breaking vote prevented this reasonable pay-for from making the cut.
Besides, the tax liability itself is hardly the only cost to businesses in this case. Tax experts agree that good tax policy should be simple, neutral, and transparent. The 600 page proposed rule released on September 12 clearly demonstrates how this tax throws these principles out the window. The most glaring problem with the corporate minimum tax is that it essentially creates a parallel tax code that businesses will have to use to calculate their liability, relying on financial statement income rather than taxable income. Tax policy that is simple and straightforward generally does not require taxpayers to maintain a “shadow” balance sheet just to calculate the tax like the new “book minimum tax” will.
All of this effort comes at a depressingly high price tag for taxpayers. Publishing 600 pages of rules about a bad policy that runs counter to the normal tax code takes a lot of work, so much, in fact, that the IRS’s watchdog investigated the resources that went into this proposed rule. It found that IRS employees have thus far spent an incredible 21,327 hours on notices and rulemaking for the corporate minimum tax alone, before the tax has even been collected and enforced.
Vice President Harris has signaled that she would continue with many of President Biden’s other bad tax policies if elected to the presidency. But even aside from that, the already-byzantine corporate minimum tax, first proposed as Biden’s “Build Back Better” agenda, and its 600 pages of complex rules are more than enough reason to be skeptical of her tax ideas.
