“From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here.” – President Obama’s 2012 State of the Union
Sound familiar? That’s because individuals already have a similar sounding plan in the Alternative Minimum Tax or AMT. The AMT was put in place to ensure that the taxes of the highest-income taxpayers never fell below a threshold level. Obama would use the term “fair.” At the time of its passage in 1969 it was aimed at 21 of the nation’s wealthiest individuals. Now it hits more than 4 million taxpayers each year.
The problem is that Congress failed to tie the AMT to inflation, meaning that every year Congress must enact a “patch” lest many middle-income families be faced with higher taxes. If that sounds like a debacle that’s because it is. Which makes President Obama’s call for a similar scheme on the corporate side of the code seem all the more ludicrous. We need to be simplifying not complicating. Apparently President Obama has never taken a look at our annual tax complexity study, which can be found HERE.