Biden’s new corporate tax hike won’t be ‘material’ to most U.S.

Business advocacy groups lobbied hard against the 15% minimum tax rate for large corporations that just passed Congress as part of the the Inflation Reduction Act, saying it was “terrible policy” that would reduce economic growth and make America “poorer.”

Wall Street analysts, however, say the legislation won’t dramatically affect company earnings or their future investments.

Companies that make more than $1 billion a year will now have to pay a minimum tax rate of 15% as well as 1% on stock buybacks. Those tax reforms, aimed mostly at the largest U.S. corporations like Google parent Alphabet, JPMorgan Chase and Facebook parent company Meta, will reduce the federal deficit by an estimated $300 billion over the next decade.

While the new taxes are “generally not positive for stocks,” the 15% corporate minimum tax won’t be “material,” Wells Fargo analysts wrote in an Aug. 9 research note that called the new taxes “modest.”

Just over 170 companies in the S&P 500 paid less than 15% in taxes last year, according to a new analysis by Credit Suisse. Of those corporations, less than half would likely see a tax hike for 2023 since the legislation allows companies to use adjusted earnings, which can be massaged in a number of ways, the analysis found.

“In general, the impacts could be somewhat minimal overall and at this point, complicated to truly understand,” Credit Suisse accounting strategist with

Senate Democrats passed the bill 51-50 on Aug. 7 without a single Republican “yea” and Vice President Kamala Harris casting the tie-breaking vote. The House approved it 220-207 on Friday; President Joe Biden is expected to sign it into law Tuesday.

“This legislation will finally make the biggest corporations start paying their fair share in taxes, and — as our nation’s top economists have confirmed — it will reduce inflationary pressures in our economy,” bill sponsor Rep. John Yarmuth, D-Ky., said after it passed the House.

House Minority Leader Kevin McCarthy, R-Calif., meanwhile accused Democrats over Twitter on Friday of jamming through a “700-page bill that raises your taxes and doubles the size of the IRS.”

“87 days from now, Democrats will have only themselves to blame…” McCarthy said, referring to the upcoming November midterms.

Catherine Schultz, vice president of tax and fiscal policy at Business Roundtable, called the 15% minimum corporate tax a “terrible policy.”

“What it really does is pick winners and losers within the tax system,” Schultz said, and added that companies that have the most stock compensation will experience substantial effects.

“Businesses are not stagnant, they’re dynamic, and they make different investment decisions on a daily basis,” Schultz said. The minimum tax “could affect how companies determine how they’re going to do certain…