Monster Tax Mash: Spooky Tax Proposals Impacting Pubcos Rise from Fresh Grave of Murdered Corporate Rate Hike

By Stuart E. Leblang, Michael J. Kliegman,and Amy S. Elliott

As those following the news on the Build Back Better reconciliation bill know, Sen. Kyrsten Sinema (D-AZ) reportedly opposes raising tax rates so much that President Joe Biden announced October 21 that corporate rate increases may be off the table when it comes to which revenue raisers will be considered to pay for new investments in health, climate and care. ^[1]   While rumors of what is in and what is out change by the hour, the following is our best guess (as of publication) as to what may end up on the menu of Sinema-approved payfors (note that even if they end up on the list, it does not mean Sen. Sinema has given her full blessing).

Possible Major Payfors on Sinema Menu:

• Mark-to-market tax on billionaires (the 700 or so American billionaires would be required to annually pay tax at—likely—long-term capital gains rates on the unrealized gain in their tradable assets (stocks) whereas nontradable assets (real estate) would be subject to a lookback charge on sale) ( $200B - $250B ² )
• Minimum tax on domestic corporations (likely not a tax on book income, but a more traditional alternative minimum tax (AMT)) ( $150B)
• Excise tax on stock buybacks (potentially structured as a 1- to 2-percent excise tax on buybacks of domestic and certain foreign publicly traded companies) ( $100B)
• International tax changes (the changes under consideration would largely align our international tax regime with what global leaders have agreed to) (less than $300B)
• Bank account information reporting to shrink the tax gap and an increased tax enforcement budget (the score is highly questionable ³ ) (less than $350B)

(*these are best guesses; note this falls short of paying for a possible $1.75T compromise)

What Proposals Remain At-Risk:

• Carried interest changes (the reconciliation bill drafted by the House Ways and Means Committee included extending the three-year holding period in Section 1061, which is used to determine if partnership interests held in connection with the performance of services can obtain preferential long-term capital gains treatment, to five years; whether this will be in the bill or substantially changed is still very much up-in-the-air) ($14B)
• Individual retirement account (IRA) limits (the reconciliation bill drafted by the Ways and Means Committee imposed limits on tax-favored IRAs for high-income filers, disallowing contributions once the total value of the IRAs exceeds $10 million and requiring such filers to take minimum distributions of 50 percent of the excess over the threshold; this is also up-in-the-air and may be removed or changed) (de minimis)
• Certain oil and gas tax preference elimination (including possibly doing away with all publicly traded partnerships (PTPs) and master limited partnerships (MLPs); although this is expected to be dropped from the bill, because it is an existential issue for dozens of publicly traded companies, renewed consideration of the change has caused a stir in the PTP/MLP world, and we thought it warranted a mention) (de minimis)

Mark-to-Market Tax on Billionaires

Back in September of 2020, we cautioned ⁴  that Sen. Wyden’s “Treat Wealth Like Wages” proposal ⁵ could gain steam if there was a Democratic sweep. ⁶   But more recently, we wrote that “we would be surprised if [Sen. Wyden’s mark-to-market proposal] made it into any draft reconciliation legislation” and that “it is highly unlikely that such proposals would be included in the final reconciliation bill.⁷

All that has changed dramatically in the last week.  On October 24, Speaker Nancy Pelosi said that “we probably will have a wealth tax”—referring to the mark-to-market proposal. ⁸  And what is the reason that what was “a step too far” just weeks ago is now looking like it could be a major payfor?  Apparently Sen. Sinema—who is stubbornly resistant to increasing the corporate and individual statutory tax rates—is open to increasing the tax burden on the super-rich by way of a mark-to-market regime. ⁹   Sen. Joe Manchin (D-WV) also supports the plan. ¹⁰ 

We are just as surprised as most that a mark-to-market tax regime is so much a part of the mix at this stage.  But we should caution that the proposal faces serious headwinds, as legitimate concerns regarding lack of time to thoroughly consider the administrative hurdles posed by such a novel taxing regime (the legislative text of which is still being drafted) could scuttle the support that has grown up around it in recent days.  In particular, House Ways and Means Committee Chairman Richard Neal (D-MA) has reportedly said he is concerned about the reliability of the billionaires’ tax proposal and that it needs more vetting. ¹¹ 

What we know so far is that the proposal would generally apply to any individual with more than $1 billion in wealth (a to-be-determined concept that would presumably have to be calculated with refreshed valuations of—what in many cases are—hard-to-value assets on an annual basis ¹² ).  However, it would also apply to any individual who earns more than $100 million per year for three consecutive years.

Those subject to the regime would have to pay an annual tax on the unrealized gains (deeming a sale at fair market value) in their tradable, liquid assets such as stocks.  While recent reporting suggests this tax would be levied at long-term capital gains rates, ¹³ the predecessor proposal would have imposed the tax at ordinary rates.  It is possible that deductions will be available in the case of an unrealized loss.  Even though repeal of stepped-up basis at death is no longer on the table, this proposal (as it applies to tradable assets) would have the same effect, as the appreciation of stock during one’s lifetime could no longer escape taxation if a mark-to-market regime were enacted.

Illiquid assets (real estate, business interests, art, etc.) would still only be subject to tax upon disposition, but Sen. Wyden would increase the tax burden on holding such assets by imposing a to-be-determined lookback charge (also called a deferral recapture amount) at the time of sale or transfer.  This amount is effectively an “interest charge” on the tax that would have been owed had the asset been marked-to-market. ¹⁴   It is expected that the proposal will include “[a]nti-avoidance provisions that would help prevent gaming near the thresholds,” and special rules governing application of the new regime to passthrough entities, estates and trusts. ¹⁵  Or, billionaires may choose to declare a value for their illiquid assets and pay the tax annually.

As for transitioning to the new regime, the super-wealthy will have to pay tax on any preexisting, built-in gain in their assets (not just appreciation going forward), but they can elect to take additional time to pay the amount that may be due on their stocks and other tradable assets in the first year.  Beyond that, the details of the phase-in have not been disclosed.

Some have made the (arguably shaky, but nonetheless untested) case that taxing the unrealized gains of billionaires in this context may be unconstitutional (possibly because it is arguably an unapportioned direct tax and the right to tax income in the 16th Amendment arguably does not extend to appreciation).  But such arguments only potentially apply to the portion that annually taxes unrealized gain on tradable assets.  The part of the proposal that would impose a lookback charge on nontradable assets upon their disposition (the portion that is also referred to as a retrospective accrual tax) does not raise the same constitutional issues.

Whether or not it is challenged, such a proposal could have an impact on the public markets if it were enacted.  Billionaires might have an incentive to transition from tradable assets to illiquid, hard-to-value investments, triggering public market sales and—in certain cases—calling into question the value of going public.  Accordingly, private businesses could attract more interest from billionaires while certain public companies with a high concentration of billionaire ownership could suffer.

Minimum Tax on Domestic Corporations

During the election, President Biden indicated that he wanted to impose a 15-percent corporate alternative minimum tax (AMT) on the book profits of certain large corporations (net U.S. income of more than $100 million and that pay zero federal taxes or receive a tax refund), with offsets limited to net operating losses (NOLs), general business tax credits (including R&D tax credits) and foreign tax credits (FTCs).  Then, when he published his green book summary of revenue proposals, he refined the proposal so that it only applied to U.S. corporations with worldwide book income over $2 billion, potentially generating about $150 billion in additional tax revenue from an estimated 45 companies over 10 years. ¹⁶ 

This was one new tax we thought was unlikely to survive in its proposed form, although we did predict that reinstating a more traditional corporate AMT seemed like a change that could get through this Congress. ¹⁷  The concept of a 15-percent “corporate domestic minimum tax” gained steamed when it showed up in a one-page list of revenue raisers that Sen. Manchin shared with Senate Majority Leader Chuck Schumer (D-NY) dated July 28 but not reported publicly until late September. ¹⁸ 

While the minimum book tax proposal was not included in the Ways and Means draft, Sen. Elizabeth Warren (D-MA) got attention for a similar proposal she recently introduced (the Real Corporate Profits Tax Act of 2021 ¹⁹ ), which is designed as an add-on tax or surtax (charged in addition to the company’s regular corporate income tax liability, although a credit is allowed for 33 percent of federal income taxes paid) of 7 percent for every dollar over $100 million in adjusted net book income (determined without regard to tax) reported to shareholders (and would impact roughly 1,300 public companies and all private companies that report over $100 million in book income).

It remains to be seen what exactly is under consideration today, but we are hearing that a corporate domestic minimum tax could look more like a traditional corporate AMT with some book tax elements.  For example, before the Tax Cuts and Jobs Act (TCJA) repealed the corporate AMT, it existed as a flat 20 percent tax on a corporation’s alternative minimum taxable income in cases where such corporation’s regular tax liability would have resulted in a lesser amount.  The pre-TCJA corporate AMT effectively wiped out the benefit of certain tax preferences (but continued to allow for depreciation deductions).

It is expected that the corporate domestic minimum tax being negotiated could reduce the benefit of accelerated depreciation.  However, both NOLs and general business credits likely will be taken into account for purposes of calculating the minimum tax.

Excise Tax on Stock Buybacks

We have been warning that a stock buyback excise tax is potentially in the mix for some time (see our most recent report on this from October 11, “Surprising Breadth of Proposed Tax on Stock Buybacks”).  Although we have not yet seen an official proposal destined for the reconciliation bill, many point to Sen. Wyden’s Stock Buyback Accountability Act as a model. ²⁰  It would impose an excise tax equal to 2 percent of the amount of the buyback on any covered corporation that repurchases its stock.  Although the proposal does not (to our knowledge) yet have an official revenue score from the Joint Committee on Taxation, there are suggestions that such a tax could generate as much as $275 billion in revenue over 10 years.  We suspect the actual score will be much lower (at around $100 billion).

Further, some have cautioned that if the excise tax rate is set at anything over 1 percent, it will cause companies to stop engaging in buybacks altogether (although that was arguably the goal).  Drafters of the proposal were hoping it would encourage “mega-corporations to invest in their workers,”²¹redirecting the funds they otherwise would have spent on buybacks toward either increasing wages or increasing investment in equipment and training.  In fact, it is thought that the approximate $100 billion estimate associated with the proposal stands regardless of whether the rate is set at 1 percent or 2 percent.

But, in practice, companies may simply end up paying out what they would have spent on buybacks as special cash dividends to investors (even though dividends are not as tax-favored as buybacks).  This would be particularly likely if a corporation has a lot of tax exempt (or tax neutral) investors, such as domestic pension funds, university endowments or sovereign wealth funds.  Even domestic corporate investors would get the benefit of a dividends-received deduction.  Given that a minority of the outstanding shares of publicly traded stock is actually held by individual taxable investors, the likely behavioral effect of increasing dividends as a result of such a buyback excise tax should not be diminished.  There is also the real possibility companies could simply sit on the cash rather than distributing or investing the earnings. ²²  

That said, as we mentioned in our earlier report, an excise tax on stock buybacks could be viewed as an indirect tax on billionaire founders whose wealth is largely locked up in the stock of their own companies.  So even if the revenue score ends up being small and the intended goal of increased investment in workers is not actually realized, the proposal may nevertheless stay in the bill simply because it addresses a perceived need progressives have to tax the rich.

That is particularly concerning given the breadth of the proposal.  We already wrote about how it could impact taxable split-offs or pro rata redemptions; partial liquidations; certain private equity acquisitions of public companies, in which the leverage piece is treated as a redemption; and many redemptions by special purpose acquisition companies (SPACs).  But another important aspect of the proposal that we wanted to flag is that it actually applies to certain foreign corporations—and not just those treated as domestic (a so-called surrogate foreign corporation) under the anti-inversion rules of Internal Revenue Code Section 7874.

Although it is commonly described as an excise tax on domestic publicly traded companies, it— by its terms—will also be levied on foreign-parented multinationals with U.S. subsidiaries.  That means that if a foreign publicly held corporation repurchases its stock, then a portion of the total amount repurchased (the portion that bears the same ratio as the U.S. gross receipts of the U.S. subsidiary bears to global gross receipts of its foreign group) could be subject to the stock buyback excise tax. ²³  It is not clear that foreign entities have focused on this risk.  While corporations may yet come out of the reconciliation bill unscathed when it comes to statutory corporate income tax rate increases (possibly preserving the 21 percent corporate income tax rate), the expected international tax changes, a possible AMT and this stock buyback excise tax will still cause some corporate pain.

International Tax Changes

We have been predicting an increase in the tax burden on foreign profits (specifically changes to the tax on global intangible low-taxed income (GILTI) and the base erosion and anti-abuse tax (BEAT)).  And although Sen. Sinema has expressed opposition to raising the headline corporate income tax rate, she seems to be on board with making necessary international tax changes to bring the United States in line with efforts by the G20 (Group of 20) and the Organisation for Economic Co-operation and Development (OECD) ²⁴ to reform our system of international taxation to, among other goals, provide for a global minimum tax of at least 15 percent (so- called Pillar Two ²⁵ ).

There are two basic changes that the United States needs to make to its GILTI regime in order for it to be compatible with the international agreement.  First, it needs to increase the GILTI rate.  And second, it needs to change how GILTI is calculated so that it is done on a country-by-country (and not aggregate) basis.  Under the latest timing agreed to by the G20, neither of these changes needs to be implemented until 2023.

Under current law, the GILTI rate is 10.5 percent and is set to increase to 13.125 percent in 2026.  Further, the United States does not give full credit for foreign taxes in its GILTI calculation (it imposes a 20 percent haircut on FTCs).  Because the OECD’s model does not similarly provide for such a haircut, the OECD actually treats the United States as effectively having a GILTI rate of 13.125 percent today (a rate that will automatically increase to 16.4 percent in 2026).²⁶

Sen. Sinema reportedly supports only those international tax changes necessary to get the United States into compliance with the OECD/G20 agreement, meaning that the GILTI rate only needs to be increased to 12 percent by 2023 assuming the 20 percent FTC haircut remains.  But it is our understanding that the other international tax changes included in the draft bill approved by the House Ways and Means Committee are also in the mix, including the taxpayer- favorable changes that would reduce the GILTI FTC haircut to 5 percent ²⁷ and loosen GILTI’s FTC expense allocation rules.  While such changes (both the good and the bad, including moving to country-by-country) may be delayed until 2023, with a 5 percent FTC haircut, the GILTI rate may be set at 15 percent (so that it technically lands somewhere between 15 percent and 16 percent for OECD purposes).

Changes are also needed to make the BEAT look more like the OECD’s undertaxed payments rule, which would generally deny deductions claimed by subsidiaries (in adopting countries) for payments made to a parent or related entity if such is domiciled in a country that has not adopted a 15-percent global minimum tax.  However, the OECD timeline for implementation of that rule has been pushed even further back to 2024.

Finally, recall that even though both of these rules (which are part of the so-called GloBE rules)—the income inclusion rule or 15-percent top-up tax (our to-be-modified GILTI) and the undertaxed payments rule (our to-be-modified BEAT)—have been agreed to by 136 member jurisdictions, ²⁸ that does not mean all signatories will adopt them.  It just means that if they choose to adopt them, they will do it in a way consistent with the agreement and that they agree to “accept the application of the GloBE rules applied by other [inclusive framework] members including agreement as to rule order and the application of any agreed safe harbours.”

A group of moderate Democratic lawmakers have already asked Congress to hold off on making any changes to the international tax rules until they have a sense of how other countries will implement the agreement (as, among other things, model rules have yet to be published).²⁹ They argue that making changes to the GILTI rules now could put U.S. firms at a disadvantage.  If all that Sen. Sinema will approve is OECD-required changes, we doubt such changes will raise much revenue at all (likely much less than the $300 billion in our estimate).

Bank Account Information Reporting ³⁰ 

While we included mention of this as it purports to be a major revenue raiser, there has been criticism that it is poorly targeted, and many House members feel that it is toxic politically.

Compromise on Rates

Although President Biden himself characterized Sen. Sinema as unwilling to “raise a single penny” by increasing corporate or individual rates,³¹ we suspect that there may still be some wiggle room on this front.  It is possible that Sen. Sinema has drawn a red line of sorts with regard to rate increases, but the reality of course is that the tax revenue to pay for the bill is still being footed by corporations and the wealthy, just in different ways.

Further, Sen. Sinema’s strategy may end up backfiring.  By forcing the Democratic caucus to seriously consider relatively novel tax increases that otherwise stood little chance of enactment (mark-to-market and minimum book tax), she is effectively making it easier for them to pay for future priorities down the road.

House leadership admitted as much.  “We can use [corporate and individual tax rate increases] another time.  They don’t go away as a source of revenue to pay for how we go forward,” Speaker Pelosi said on October 24.  “I don’t want the Trump tax cuts perpetuated.  So I don’t want anybody to think if we don’t address those right now that they’re off the table.  We will use them for something at some point.” ³² 

For these reasons, we would not be entirely surprised if, in the final deal, minimal rate increases (say, increasing the corporate tax rate from 21 percent to 23 percent and increasing the capital gains rate from 20 percent to 22 percent) are included with Sen. Sinema’s blessing.

Predictions on Timing

On October 24, House Speaker Nancy Pelosi said that 90 percent of the bill is “agreed to and written.” ³³   At this time (Tuesday morning), the House is still planning to pass the bipartisan infrastructure (BIF) bill by October 31, which is the day that the highway trust fund authorization expires.  Progressives have said that they will not vote for the BIF until an agreement is reached on the Build Back Better reconciliation bill, and Washington insiders are divided on whether such an agreement can be reached such that BIF passes by Halloween (and whether House progressives will hold their ground—and withhold their BIF votes—until they have secured a vote on the actual legislative text of the reconciliation bill).  Either way, expectations are that the reconciliation bill could be fully enacted sometime around Thanksgiving, although it could drag on into early December.

^{[1] “President Joe Biden said he doesn’t think there are enough Democratic votes to raise tax rates . . . A White House official said Biden was referring only to corporate tax rate increases,” as reported by Jenny Leonard and Josh Wingrove, Biden Says He Doesn’t See Votes to Raise Tax Rates in Deal (2), Daily Tax Report, Oct. 21, 2021 (subscription required).}

^{[2] Because the bill is not written yet—we hope it will be written today and introduced tomorrow—only then can the Joint Tax Committee evaluate what it brings in.  We anticipate $200 [to] $250 billion,” full interview with House Speaker Nancy Pelosi on CNN’s State of the Union with Jack Tapper, Oct. 24, 2021: https://www.cnn.com/videos/politics/2021/10/24/full-interview-with-speaker-nancy-pelosi.cnn}

^{[3] Some Democrats seem to think the revenue score for all tax enforcement related provisions—including an increased budget for IRS enforcement, which may not score—will add up to “several hundred billion dollars”}

^{(https://www.cnn.com/videos/politics/2021/10/24/full-interview-with-speaker-nancy-pelosi.cnn).  The Congressional Budget Office has said that increasing IRS funding by $80 billion over 10 years would increase revenues by about $200 billion over 10 years, so $120 billion in net revenue (https://www.cbo.gov/publication/57444).  At one point, increased IRS funding was being considered as a revenue raiser in the bipartisan infrastructure bill, with $40 billion said to raise (on net) $100 billion in additional revenue.  But there are serious questions as to whether the Joint Committee on Taxation (JCT) will score legislation providing funding for the IRS (which is traditionally nonscorable).  (https://www.reuters.com/world/us/whats-us-senates-12-trillion-infrastructure-plan-2021-06-24/; https://www.reuters.com/world/us/us-senators-drop-tax-enforcement-bipartisan-infrastructure-bill-portman-2021-07-18/; https://www.irs.gov/pub/irs-soi/16resconholtzblatt.pdf)}

^{[4] “Predicting How Biden’s Tax Hikes Would Impact Business” (Sept. 10, 2020).  We explained that while the proposal is not a wealth tax (something that states such as Cali-fornia and New York have recently considered), it accomplishes many of the same objectives.}

^{[5] https://www.finance.senate.gov/imo/media/doc/Treat%20Wealth%20Like%20Wages%20RM%20Wyden.pdf}

^{[6] Then, in January, once Democratic control of the 117th Congress had been secured, we wrote that while Sen. Wyden’s mark-to-market proposal could still gain momentum, we did not think it was likely to become law in 2021.  “Tax Policy Implications of Democrats’ Narrow Margins” (Jan. 15, 2021).}

^{[7] “Flurry of Last-Minute Reconciliation Proposals Could Significantly Impact Public Companies” (Sept. 11, 2021).}

^{[8] See the full interview with House Speaker Nancy Pelosi on CNN’s State of the Union with Jack Tapper, Oct. 24, 2021: https://www.cnn.com/videos/politics/2021/10/24/full-interview-with-speaker-nancy-pelosi.cnn}

^{[9] “Sinema is pushing back against higher individual and corporate rates, but she seems open to soaking the rich with a ‘mark-to-market’ scheme that would tax investments yearly at market rate instead of at the sale of the asset,” as reported by John Bresnahan, Anna Palmer and Jake Sherman, NEW: Inside the plan to isolate Sinema, Punchbowl News AM, Oct. 21, 2021 (https://punchbowl.news).}

^{[10] “Senate Democrats are expected to introduce the so-called billionaires tax this week, a proposal that Manchin said he is on board with,” as reported by Marianne Levine and Burgess Everett, Manchin gets closer to ‘yes’ on Dems’ $1T-plus social spending plan, POLITICO, Oct. 25, 2021 (https://www.politico.com/news/2021/10/25/manchin-closes-in-on-deal-with-white-house-517069?nname=playbook-pm&nid=0000015a-dd3e-d536-a37b-dd7fd8af0000&nrid=00000159-dc5a-d420-abdd-de5b97e30000&nlid=964328).}

^{[11] https://twitter.com/JakeSherman/status/1452777690734399495}

^{[12]  Although this conflicts with a statement in Sen. Wyden’s Treat Wealth Like Wages proposal, namely that his anti-deferral accounting proposal “would not require taxpayers or the IRS to precisely value assets before their market value and sale price is known” (https://www.finance.senate.gov/imo/media/doc/Treat%20Wealth%20Like%20Wages%20RM%20Wyden.pdf).}

^{[13] This is different than Sen. Wyden’s original Treat Wealth Like Wages plan, but appears to be the latest under consideration.  See Richard Rubin, Taxing Billionaires to Pay for Biden’s Agenda: What to Know About the Democrats’ Plan, Wall St. J., Oct. 25, 2021 (https://www.wsj.com/articles/billionaires-tax-bill-us-democrats-what-to-know-11635183720).}

^{[14] For example, assume a billionaire subject to this mark-to-market regime purchases real estate for $1 million in 2022 and holds it until 2031, when it is sold for $5.5 million (realizing $4.5 million of taxable gain).  The holding period in this case is 9 years.  By allocating the $4.5 million of gain pro rata across the 9-year holding period, $500,000 of gain is allocated each year.  Assuming tax at 23.8%, that would result in $119,000 of tax each year (had it been subject to the mark-to-market regime).  The interest charge on that amount of tax (this rate varies and is generally the federal short-term rate plus 3 percentage points—we will use 3.22%) will be about $3,800 for the first year, double that for the second year, three times that for the third year, and so on (45 times $3,800 in all) for a total of over $171,000.  That does not include the 23.8% tax on the $4.5 million of gain, which would also be due upon disposition.}

^{[15] https://www.finance.senate.gov/imo/media/doc/Treat%20Wealth%20Like%20Wages%20RM%20Wyden.pdf}

^{[16] For a more detailed explanation of this proposal, see our report “Biden Green Book Tax Proposals’ Impact on Publicly Traded Companies” (June 2, 2021).}

^{[17] “Predicting How Biden’s Tax Hikes Would Impact Business” (Sept. 10, 2021).}

^{[18] Burgess Everett, Manchin proposed $1.5T top-line number to Schumer this summer, Politico, Sept. 30, 2021 (https://www.politico.com/news/2021/09/30/manchin-proposed-15t-topline-number-to-schumer-this-summer-514803).}

^{[19] S. 2680: https://www.congress.gov/bill/117th-congress/senate-bill/2680?s=1&r=39}

^{[20] For the legislative text of the Stock Buyback Accountability Act (S. 2758), see https://www.brown.senate.gov/imo/media/doc/stock_buy_back_accountability_act_bill_text.pdf.}

^{[21] Press Release, Sen. Brown, Brown, Wyden Unveil Major New Legislation to Tax Stock Buybacks, (Sept. 10, 2021) (https://www.brown.senate.gov/newsroom/press/release/brown-wyden-tax-stock-buybacks).}

^{[22] “Defenders of buybacks say there is little evidence to suggest that companies would invest more if they spent less buying their own shares.  Instead, they might just sit on huge amounts of cash,” as reported by Jonathan Weisman and Peter Eavis, Democrats Eye Taxing Stock Buybacks and Partnerships to Pay for Agenda, N.Y. Times, Sept. 10, 2021 (https://www.nytimes.com/2021/09/10/us/politics/stock-buybacks-partnerships-democrats-tax.html).}

^{[23] A covered corporation is defined as any domestic publicly held corporation, including a U.S. subsidiary of a foreign publicly held corporation, where publicly held is determined by reference to IRC §162(m)(2).}

^{[24] OECD/G20 Inclusive Framework on BEPS (which stands for Base Erosion and Profit Shifting).}

^{[25] For more on this, see our report “More than 130 Countries Reach Consensus on 15% Minimum Tax and New User-Focused Taxing Right—What Are the Implications?” (July 14, 2021).}

^{[26] https://www.oecd.org/tax/beps/tax-challenges-arising-from-digitalisation-report-on-pillar-two-blueprint.pdf}

^{[27] “Tax Provisions in Ways and Means Reconciliation Draft Could Have Far-Reaching Impacts on the Markets” (Sept. 14, 2021).}

^{[28] https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2021.pdf}

^{[29] Brian Faler, Moderate Democrats, citing global pact, want ‘pause’ in international tax changes, Politico, Oct. 15, 2021 (politico.com/news/2021/10/15/moderate-democrats-international-tax-changes-516104).}

^{[30] A version of this proposal included in the so-called green book released in May 2021 would require financial institutions to annually report gross inflows and outflows for all business and personal accounts at or above a gross flow threshold of $600 or a fair market value of $600.  The threshold has reportedly since been increased to $10,000, and a new exemption for all wage income would apply.}

^{[31] “Where she’s not supportive is, she says she will not raise a single penny in taxes on the corporate side and/or on wealthy people, period.  And so that’s where it sort of breaks down.  And there’s a few other issues it breaks down on,” said President Biden at the CNN Presidential Town Hall Oct. 21, 2021 in Baltimore (transcript available here: http://transcripts.cnn.com/show/se/date/2021-10-21/segment/01).}

^{[32] Full interview with House Speaker Nancy Pelosi on CNN’s State of the Union with Jack Tapper, Oct. 24, 2021: https://www.cnn.com/videos/politics/2021/10/24/full-interview-with-speaker-nancy-pelosi.cnn.}

^{[33] https://www.cnn.com/videos/politics/2021/10/24/full-interview-with-speaker-nancy-pelosi.cnn}