The Senate could vote on a climate change and tax bill as soon as this week, according to Dealbook’s newsletter, which, if passed, would give an unnamed group of accountants in Norwalk, Connecticut, considerable powers. will be taken.
On Wednesday, a bipartisan group of former Treasury secretaries, including Henry M. Paulson Jr. and Timothy F. Geithner, backed the Inflation Reduction Act, a bill said to fight inflation and address climate issues. The group also said the bill was “funded by a prudent tax regime.”
Most of the bill will be funded by a minimum 15% tax on corporate profits. It’s meant to address a long-standing problem. Many profitable companies, including giants like Amazon, pay little or no federal income tax. It uses legitimate tax cuts, but it also uses strategies that many believe are aimed solely at avoiding taxes.
Under this law, companies with more than $1 billion in annual profits must pay at least 15% of their “book earnings” (the amount they report to shareholders, not the IRS) as federal income tax. This figure is adjusted for various factors, including foreign taxes and R&D credits.
This is where accountants come in. About 50 years ago, the U.S. Securities and Exchange Commission gave the Treasury Department responsibility for creating and updating “generally accepted accounting principles” that determine how quarterly and annual earnings are calculated. Financial Accounting Standards Boardis a private organization funded by corporations and overseen by the Financial Accounting Foundation, a non-profit organization.
It is run by the FASB — pronounced “Fazby.” 7 member board accountants and professional investors. One of his ways to tweak corporate America’s tax bill under the new tax code is to have his FASB rewrite how corporations calculate profits.
So what do we know about the authors of accounting rules and the foundation leaders who oversee them?
This group lacks diversity. The board consists of his four white men and his three white women. A FASB spokesman told DealBook that the organization, which was founded in 1973, had no board members of color.
It is also politically relevant. Kathleen CaseyChairman of the Nominating Committee of the Board of Directors.
And its members are highly paid: Richard JonesThe former chief executive of accounting firm Ernst & Young, who became chairman of the FASB, received a base salary of $1 million last year, according to his tax returns. The minimum salary for a director was still over $800,000.
Moreover, Jones does not appear to support a minimum corporate tax.last year he said in a speech He opposed imposing a minimum corporate tax based on book income.
Jones said the group’s role is to set accounting rules that best convey the health of the company. Using book revenues to determine tax payments injects public policy into financial accounting, he said, making it difficult for his organization to do its job.
“It definitely puts more pressure on our mission and what we do,” he said.
