Here's what one MIT accounting professor is suggesting:
· Broaden the corporate tax base without Congress having to take the politically difficult step of explicitly repealing tax preferences.Let’s unpack a few of these issues.The book tax could put Congress in the business of defining financial statement income. That could politicize disclosure and perhaps make corporate finances less transparent to shareholders. This wouldn’t be a problem if Congress instead limits the benefits of the existing tax base.
If lawmakers continue down this road, the book tax base could look suspiciously like the regular income tax base. By capping the value of all preferences, Congress could avoid this problem. The book tax also would create new opportunities for tax avoidance. For example, mega-companies could avoid most of the minimum tax by contracting out work that requires capital equipment.
Congress would stop this by limiting the value of tax preferences for all businesses. If necessary, it could exempt small businesses.Business preferences are substantial and often exceed what companies can use in a given year. In 2018, the $51 billion in general business tax credits included $23 billion for research and experimentation, $12 billion for energy, and $9 billion for low-income housing. About $100 billion in unused tax credits was carried forward from previous years.
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