Some large corporations pay little or no U.S. tax as they report significant profits to shareholders. In an effort to curb tax avoidance among the largest corporations, the Biden Administration has proposed a 15% minimum tax on worldwide book income for corporations with pretax net income of more than $2 billion. Multilateral organizations have also proposed a worldwide minimum tax, also based on book income. There are several proposals in the 117th Congress to either impose a minimum tax or modify existing minimum tax laws.

One reason some entities pay little in corporate income tax is the deliberate design of the U.S. tax system, which includes specific provisions that reduce corporate taxes, referred to as tax expenditures. These provisions produce a substantial revenue loss relative to the yield of the corporate tax. U.S. corporate taxes relative to worldwide income may also be low because some income is earned abroad, and thus subject to foreign taxes. Various measures are in place to prevent double taxation of that income, including a credit for foreign taxes paid. Income for tax purposes as compared to income reported to shareholders (i.e., book income) can also differ due to limits on the deduction of net operating losses.

Corporate income can be measured in different ways. Economic income is the sum of dividends and distributions paid and changes in the market value of a firm adjusted for inflation. Corporate profits as measured by the National Income and Product Accounts (NIPA) are close to economic income but exclude all or a significant part of foreign-source income and do not include capital gains. The NIPA data also include income from entities that do not pay the corporate income tax. Taxable income is income subject to the corporate income tax as determined by the tax code. Broadly, taxable income is receipts minus deductions with additional adjustments. Taxable income (also referred to as income subject to tax) cannot fall below zero. Book income (also referred to as financial income) is income reported in financial statements, which includes income and deductions guided by accounting standards. Numerous factors affect differences between tax and book income, including the point in the business cycle at which income is measured and the different treatment of many aspects of income and deductions (e.g., foreign-source income, tax-exempt interest, and depreciation).