The White House released its Fiscal Year 2023 Budget (‘FY23 Budget’) on 28 March. Also on 28 March, the US Treasury released the General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals, commonly referred to as the ‘Green Book.’ The Green Book explains the revenue proposals in the President's budget and serves as a guidepost to Congress for tax legislation by describing current law (adjusted baseline), proposed changes, the rationale from a policy perspective, and Treasury’s revenue projection.
The White House summarizes the tax provisions of the FY23 Budget as outlining steps toward a fairer tax code that encourages investment in the United States, stops the shifting of jobs and profits abroad, and ensures that corporations and high-income individuals “pay their fair share.”
The FY23 Budget would raise the corporate tax rate to 28%, complemented by other changes to corporate tax provisions intended to incentivize job creation and investment in the United States. Additionally, the FY23 Budget asserts that it would prevent MNCs from using tax havens to “game the system,” reiterating the Biden administration’s commitment to the OECD’s Pillar Two proposal.
Action item: Companies should evaluate and model the potential effect of the corporate tax increase proposals set forth by President Biden and the pending reconciliation legislation. Companies also should engage with policy makers about how specific proposals may affect their employees, job creation, and investments in the United States.