# Real Corporate Profits Tax Act of 2021

This bill would create a new tax on large corporations based on the profits they report to investors and shareholders. Right now, corporations pay federal income tax based on their taxable income, which can be calculated differently than the profits they publicly report on financial statements. This bill would add an additional 7 percent tax on the "book income"—the actual profits shown in official financial statements—for any corporation earning more than $100 million per year.

Here's how it would work in practice: If a large corporation reports $500 million in profits to its shareholders, it would owe this new tax on the $400 million that exceeds the $100 million threshold. At 7 percent, that would be $28 million in additional taxes. The bill applies to most corporations, though it excludes investment companies and real estate investment trusts. Foreign companies operating in the United States would only pay this tax on profits they make from U.S. business activities.

To prevent companies from paying taxes twice on the same income, the bill includes a credit that reduces this new tax based on regular income taxes already paid. Specifically, corporations can credit 33 percent of their regular federal income tax liability against this new book income tax. The bill also prevents companies from deducting this new tax as a business expense, which is standard practice for most taxes. This measure would primarily affect large, profitable corporations—smaller businesses under the $100 million threshold would see no impact at all.

Real Corporate Profits Tax Act of 2021

Beyer, Donald S.

Real Corporate Profits Tax Act of 2021 This bill imposes an additional 7% tax on the adjusted net book income of a corporation that exceeds $100 million. It also allows a credit for a taxpayer, other than an S corporation, for a specified percentage of the taxpayer's net regular tax liability.