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Yahoo Finance’s Rick Newman, Julie Hyman, and Myles Udland discuss the details of Biden’s plan for corporate tax hikes.
MYLES UDLAND: All right, let's turn our attention now to the corporate world. The taxman is here. Rick Newman joins us now to talk about the future of corporate taxes here in the US. And Rick, you know, the latest proposal, coming out of the Biden administration, an interesting one, targeting really just the very top of the corporate America pyramid, if we want to think about that on the minimum tax that companies with a minimum amount of income would have to pay. Talk us through some of the details in this latest proposal.
RICK NEWMAN: Right. That proposal is different from what Biden wanted to do when he was a candidate. So the latest idea from the Treasury Department is there would be a 15% sort of an alternative minimum tax on companies that have net income above $2 billion, and do not otherwise pay any taxes. Because they claim tax breaks or other things to winnow their tax bill down.
So when Biden was a candidate, his threshold for imposing that tax was much lower. It was $100 million. So raising it from $100 million to $2 billion only leaves you with about 50 companies that might actually qualify to pay that tax or be forced to pay that tax.
So basically, he's saying we only want to apply that tax to the biggest companies that for what, one reason or another, are not paying tax. And by the way, this is a controversial idea just inherently. Because those companies-- if they're not paying tax, the reason is they're claiming legal tax breaks that Congress put into the law in the past.
Because it was considered to be a good incentive, whether it would be for research and development, or investing, or hiring, or something like that. Those tax breaks are there for a reason. So even now, what Biden wants to do is layer one tax onto the system to offset another series of tax breaks that are already there.
JULIE HYMAN: And at the same time, Rick, there is this Janet Yellen push to make a global minimum tax, in part because there have been cautions in the past that if we raise taxes here in the US, well, companies are just going to redomicile elsewhere. In addition to that, though, aren't there some measures in here to try to keep companies in the US, besides that global tax push?
RICK NEWMAN: Yes, there are. And honestly, nobody can figure out how to do this. So with regard to big companies-- multinational companies that do business all around the world-- the Biden plan is basically repealing and replacing the Trump plan from 2017.
So this is complicated. And we don't have time to get into the details. But the idea is how to correctly tax revenue that big companies earn in other countries, or tax revenue that they might from intellectual property here that they are exporting to other countries.
So one problem is that if you have a higher rate in the United States, many companies-- and we saw this back, you know, five, or seven, or eight years ago-- they locate in Ireland. Or they located in the Bahamas, where the tax rate is 12% or lower. And suddenly, they have only 50 employees in Ireland. But they're claiming half of their income there.
So she wants to get the OECD countries-- the advanced nations in the world-- to have some minimum tax, which Janet Yellen wants to be a 21%. But at the International level, they're talking about a much smaller number, such as 12%. So it's not clear we're ever going to get to that sort of tax regime that she wants. But the Biden administration is at least trying.
MYLES UDLAND: All right, Yahoo Finance's Rick Newman with the evolving efforts to change the tax code here in the US. We'll see how things shake out, as we get into further deliberations down in Washington DC. Rick, thanks for joining us.