The new corporate minimum tax

The new corporate minimum tax

For decades, profitable corporations have been able to pay a lower effective tax rate than the workers they employ. But a provision included in the Inflation Reduction Act aims to close loopholes that allow many rich firms to pay $0 in federal taxes. The change to the corporate minimum tax is one of the most significant changes to the U.S. tax code in recent years, but its rollout is being met with confusion and opposition. The New York Times’ Alan Rappeport explains

But making the tax operational has become a mammoth challenge for the Biden administration, which has faced intense lobbying from industries that could be on the hook for billions of dollars in new taxes. Those groups have been flooding the Treasury Department with letters asking for lenient interpretations of the law and trying to create new loopholes before their tax bills come due next year. … The legislation, which passed with no Republican support, called for the corporate minimum tax to take effect in the 2023 tax year, meaning it will apply to corporate profits earned this year. But the tax was only loosely defined, and Treasury is still writing the rules that will determine how it is carried out.

Meanwhile, Donald Trump is promising aggressive new tax cuts if he returns to the White House. 

Trump’s advisers have pitched him on proposing a 15 percent corporate tax rate, which is what Trump had also initially endorsed for his 2017 tax law, according to Stephen Moore, an outside economic adviser to Trump. The 2017 law slashed the corporate tax rate from 35 percent to 21 percent while also ending some business loopholes, but congressional Republicans resisted Trump’s attempts to reduce it even further.


Life sentence for fleeing a traffic stop
Markus Lanieux was expecting to face two years in prison for fleeing a traffic stop in 2009. But prosecutors used Louisiana’s habitual offender law – and Lanieux’s two prior drug convictions – to issue him a life sentence. Louisiana’s 2017 bipartisan criminal justice reforms gave Lanieux hope that he would soon receive a new sentence. But Attorney General Jeff Landry challenged a new law that allowed prosecutors to revisit and reduce excessively harsh sentences, and on Friday the state Supreme Court upheld Lanieux’s life sentence. Verite’s Richard A. Webster reports

It is seen as part of a growing backlash across the country against prosecutors who have pushed for an end to mass incarceration. Former President Donald Trump, who has endorsed Landry, vowed to go after “Marxist” district attorneys who he said have allowed U.S. cities to be turned into “hellholes.” Florida governor and presidential hopeful Ron DeSantis echoed his political rival, boasting in August of his efforts to remove local prosecutors he accused of failing to uphold the law.


State protections against medical debt
Four in 10 American adults – an estimated 100 million people – are saddled with medical debt. This debt deters people from seeking medical care, lowers credit scores and keeps families from buying a home or putting money away for their childrens’ college education. While federal medical debt protections do exist, they are vague and loosely enforced, leaving it up to states to provide these much-needed policies. A new report from the Commonwealth Fund examines the many gaps that exist at the state level. 

Federal law requires nonprofit hospitals to establish and publicize a written financial assistance policy, but these standards leave out for-profit hospitals and lack any minimum eligibility requirements. As the primary regulators of hospitals, states have the ability to fill these gaps and require hospitals to provide financial assistance to low-income residents. Twenty states require hospitals to provide financial assistance and set certain minimum standards that exceed the federal standard. 


What’s next for “school choice”?
For years the conservative “school choice” movement has focused on vouchers as a way to steer state money away from public education to private and charter schools. But now the focus is on Education Savings Accounts (ESAs). Similar to school vouchers, these programs transfer public dollars to private institutions. These accounts differ from vouchers in that parents are given much more discretion, as public dollars can cover other costs besides tuition. Vox’s Andrew Prokop explains how pandemic disruptions and culture wars have given the school choice movement momentum over the last three years and what happens when state budgets struggle to keep up. 

In many of these states, universal ESAs were passed at a time when state budgets were flush with Covid aid. States could create what was essentially a new benefit for families who weren’t previously utilizing government money to educate their children, while often increasing funding and teacher pay at public schools, in “have your cake and eat it too” fashion. But the Covid aid is ending, which will eventually present a math problem for states if revenues slow down. Either taxes will have to go up, or something — ESAs, public schools, or other state spending — will have to be cut. “The federal money drying up is going to be a big deal, and the whole tenor of the conversation is going to change,” said Andrew Rotherham of Bellwether Education Partners.

Note: While legislation to establish an Education Savings Account (ESA) program in Louisiana failed to
advance during the 2023 legislative session, a resolution to set up the framework for such a program did.


Number of the Day
$8 trillion – Estimated cumulative cost to the federal budget of the War on Terror, which began after the Sept. 11, 2001 terrorist attacks on New York and Washington, D.C. (Source: Costs of War project, Brown University)