Lowering the alternative minimum tax rate for corporations in the Senate’s bill could be one way to address concerns among the business community, Republican Conference Chairman John Thune said.
“There are different ways you could structure a repeal — or a partial repeal,” the South Dakota Republican said Wednesday. “If you adjust the rate, take the rate down. And so it’s all scalable.”
The current conversations between the House and Senate about the alternative minimum tax center around finding a way to fully repeal it, according to another GOP senator who spoke on background to discuss ongoing negotiations. But how to pay for that remains an issue. It comes down to available revenue, the senator said.
The Senate voted Wednesday 51-47 to go to conference with the House.
Businesses have pushed back against the last-minute GOP decision to keep the current 20 percent corporate AMT. Tax experts warn the provision could undermine other aspects of the bill since the business tax rate would also be reduced to 20 percent under the proposal.
Keeping it at current levels could also impact popular tax incentives, like the research and development tax credit.
The Joint Committee on Taxation said maintaining the current corporate AMT would produce an additional $40 billion in revenue over ten years.
Offsets will likely be scarce as the two chambers try to reconcile differences between the two bills. Several sources said they believe the JCT estimate of the AMT provision is low and could rise in future analyses.
“We live or die by JCT,” Senate Majority Whip John Cornyn of Texas said. “They pretty much call the balls and strikes.”
Reducing the AMT rate to, say, 10 or 12 percent would be less expensive than a full repeal. Thune said it could also help ensure it does not impact other provisions in the tax bill, like the reduced corporate tax rate.
Thune said he thinks a partial repeal is one option to address the concerns.