Industry lobbyists mobilized on Monday in an effort to undo what one described as a “drafting error” in the Senate tax bill.
The last-minute inclusion of the alternative minimum tax (AMT) in the legislation is threatening to make obsolete a host of tax breaks also included in the bill. The “unpleasant surprise,” as the US Chamber of Commerce’s Caroline Harris described the AMT’s addition, left many scratching their heads as it was kept at 20% — the same as the overall corporate rate proposed.
The AMT is meant to provide a tax rate floor after other deductions and credits are accounted for. Under the current 35% corporate rate, companies claiming other tax rebates would still have to pay at least the 20% AMT. If the overall rate is 20%, and the AMT is maintained, then specific tax breaks included in the bill related to intellectual property, new equipment spending and R&D would be meaningless.
Share of tech companies that spend heavily on R&D were clobbered in Monday trading as investors digested the contents of the bill.
Director of government affairs at the Information Technology Industry Council was quoted by Bloomberg as saying the inclusion of AMT at 20% was likely a simple “drafting error.”
The Wall Street Journal Reported Monday night that technology, banking and other industries’ lobbyists had mounted a new round of lobbying to remedy the situation.
“’You really have to scratch your head at an effort like this that would negatively impact research and development in the U.S.,’ said Linda Moore, CEO of TechNet, a trade association that includes top officials at Oracle Corp, Cisco Systems Inc, Visa Inc, and Microsoft Corp.”
“’Maintaining the corporate AMT will add the complexity of dealing with two tax systems and will penalize companies that engage in research,’ wrote Ronald Dickel, Intel’s vice president of finance and director of global tax.”