Different rules apply for the determination of income for US tax purposes and for financial reporting purposes. Both are artificial constructs. Who is to say that one is a more accurate indication of “income” than the other? Congress is largely responsible for the difference by creating incentives through the tax code by offering accelerated depreciation, etc. for taxable income for pet projects such as climate related investment.
The AMT provisions of this tax bill create enormous additional complexity. The fact that they are designed to apply to only about 150 large corporations isn’t a way to create an rationale and equitable corporate tax system. Rather, it is designed to punish, in a Robin Hood like manner, the most successful US corporations and to *temporarily* fund spending provisions in the bill. Its complexity will create additional complexity and costs which consumers and investors ultimately bear.
I say *temporary* funding because the corporate AMT is generally an acceleration of regular tax liability. If a corporation pays the AMT, a credit against future corporate regular tax is carried forward. Congress likes to complain about corporations artificially carrying forward financial book income and postponing taxable income. Here, Congress is engaging in the same sort of shenanigan by accelerating current tax revenues at the cost of future revenue. The JCT only estimates additional revenue over a 10-year period. What they don’t report is that the AMT revenue during the first 10 years will reduce tax revenues in the years thereafter. It’s not completely zero sum, but mostly zero sum over a longer period of time.
The extent of public accounting games played by our political *leaders* is shameful.
That is all from Vivian Darkbloom.