Congress has written a tax code that allows some companies to pay very low tax rates. Joe Biden thinks that’s a problem, but he doesn’t want to abolish or directly limit the provisions of the tax code that cause it. Instead, he would create a new 15 percent minimum corporate tax.
Richard Rubin’s Wall Street Journal article on the proposal explains the drawback:
But critics say Mr. Biden’s proposal could be counterproductive, partly because it would discourage companies from using tax breaks Congress created to promote investment in some of the very things the former vice president is trying to promote, such as renewable energy, low-income housing and manufacturing.
“It would be more straightforward to decide what policy we want and enact it,” said Michelle Hanlon, an accounting professor at the Massachusetts Institute of Technology. Giving out tax breaks and then using a minimum tax to take some of them back, she said, is a “frankly kind of lazy way to do it.”