Corporate tax rate should not exceed 25%


Congress is unlikely to raise the corporate tax rate to well above 25%, as that is as high as Sen. Joe Manchin (DW.Va.) is likely to go, and his vote is critical to maintaining Democrats together in the Senate, Diana Deem, director of parliamentary and political affairs at the American Institute of CPAs, said at a conference last week AICPA’s CFO Virtual Conference.

“In an equally divided Senate, his desires are paramount,” Deem said.

House and Senate leaders will want to use the reconciliation process to pass the tax and funding measures to pay for the Biden administration’s vast legislative agenda, which includes some $ 2 trillion for infrastructure improvements. and other long-term investments.

The Biden administration has proposed increasing the tax rate from 21% to 28% and also imposing a 15% tax on accounting income for certain companies as well as changes that could increase taxes on transactions at overseas business.

Budget reconciliation is the preferred way to move big spending bills, as it only requires a simple majority vote in the Senate rather than a filibuster-proof two-thirds vote. But to be successful on this strategy, the bill will likely need to be ready before the Senate recess for its August recess.

“Count on [Manchin] concede to reconciliation as long as the corporate tax rate does not exceed 25%, ”she said.

Focus ESG

Congress is also likely to weigh in on another Biden priority – pinpointing business environmental, social and governance reporting (ESG), a movement for companies to highlight their previously voluntary values ​​of general interest.

The House Financial Services Committee has already passed a bill that would require the Securities and Exchange Commission (SEC) to make ESG reporting a requirement, a move the SEC began to prepare for right after Biden was elected when Allison Herren Lee was the agency’s acting president.

Now that longtime chief financial officer Gary Gensler has been confirmed as chairman of the SEC, the agency should make a strong move in that direction.

“We can expect to see something soon, as public comment on the SEC’s proposed approach is expected in June, and the SEC has promised swift action,” she said.

Congress should divide along partisan lines on the issue; During Gensler’s confirmation hearing in April, Republicans generally opposed the ESG reporting requirement while Democrats generally favored it.

“Needless to say, this is a very politically charged issue,” she said.

Remote employees

A key tax issue that will likely gain attention this year relates to what Congress is calling the new mobile workforce.

Supporters are pushing for the federal government to create a single standard so that businesses, as they envision a future in which more of their employees work offsite, only have to comply with one set of tax rules . Right now, businesses face inconsistent tax and withholding rules, depending on the states remote employees live in.

The issue has been in the news because of the pandemic and some lawmakers have seen it as something they can work together in a bipartisan fashion.

A mobile labor bill presented last year and again this year Senators John Thune (RS.D.) and Sherrod Brown (D-Ohio) were initially included in the reconciliation bill passed by Congress in February to pay for the administration’s stimulus package Biden, but were removed prior to its adoption.

Despite the setback, there is reason to believe it can be passed both in the House, which has already passed it once, and in the Senate, Deem said.

“So, we are looking forward to having this language included in a new reconciliation package, so all eyes will now be on this package,” she said.

If passed, it will be a victory for accounting teams, as it will simplify state tax compliance as corporate workforces become increasingly distributed.


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