Due to Democratic policies, the sunsetting of Republican tax reforms, the anticipated increase in the corporate minimum tax for billion-dollar companies, and other factors, businesses in the United States would likely have to pay a higher share of their federal taxes in 2023.
Businesses will pay more taxes as a result of many changes made by the Inflation Reduction Act (IRA). Additionally, the Tax Cuts and Jobs Act (TCJA), passed in 2017 and signed into law by the Trump administration, contains a number of temporary measures that will gradually expire starting in 2023.
According to the Joint Committee on Taxation, the combined impact of these two developments would lead to an additional $115 billion in tax increases for corporations.
The National Association of Manufacturers’ managing vice president for tax and domestic economic policy, Chris Netram, stated, “On the impact of tax increases in a recessionary period, we are highly concerned. Some of the items that have already taken effect, that Congress failed to reverse at the end of last year, are causing a lot of pain for our members.”
The new corporate minimum tax and the stock buyback tax are two IRA tax regulations that are anticipated to have a significant negative impact on business. Both of these clauses went into force at the start of 2023.
For three consecutive years, American companies that generate more than $1 billion in book income are subject to a 15 percent corporation minimum tax.
As a result, it is anticipated that the average effective tax rate on corporate profits will increase to 19.3 percent from 18.7 percent.
