The current code taxes labor reliably while allowing capital, wealth, perks, and inherited appreciation to escape or defer tax. The Accord taxes progressively by broadening the base, applying higher rates at the top, and pairing broad consumption taxation with monthly rebates and luxury surcharges.
Firms using the American platform contribute to its upkeep. Today they often do not. Decades of corporate-rate cuts (35% → 21% under TCJA in 2017) combined with the legal architecture for credit and deduction stacking — R&D credits, accelerated depreciation, foreign-tax credits, NOL carryforwards, transfer pricing — produce a regular pattern in which the largest profitable firms pay single-digit effective federal rates while reporting tens of billions in book income to shareholders. ITEP's 2024 analysis of Fortune 500 firms found ~55 firms with negative effective federal rates and ~95 with rates below 5% over the 2018–2022 window, despite substantial book profits.
The mismatch between book profitability (what shareholders see) and tax payment (what the public sees) is the structural failure. The architecture's response is to require that the two converge above a threshold.
A second failure: stock buybacks have replaced dividends as the dominant capital-return mechanism, partly because buybacks defer shareholder income tax indefinitely (no realization until the share is sold). The current 1% federal buyback excise (Inflation Reduction Act §10201) is too low to materially alter the buyback-vs-dividend math.
Three-instrument response.
The corporate income tax rate returns to 28.0% permanent (Year 6+) on taxable income. Years 1–5 use a transition rate of 30% that produces approximately $310B over five years of additional capacity, funding the VHA-Expansion healthcare overlap that bridges Distributed Healthcare deployment.
The book-income minimum tax of 15% applies as a backstop on financial-statement earnings above a published threshold. A firm pays the higher of (a) the 28% rate on taxable income or (b) the 15% book minimum on financial-statement earnings. The book minimum does not depend on transfer prices or credit-stacking arithmetic — it depends on what the firm reports to investors. The two systems cannot diverge.
The buyback excise rises to 4% on net repurchases — calibrated to make buybacks roughly cost-equivalent to dividends after accounting for the deferred-realization advantage to shareholders.
Profitable C corporations on taxable income. Profitable firms with substantial book income but low taxable income (the deduction/credit-stacking pattern) on the book-minimum backstop. Firms repurchasing their own shares in net amounts above the published threshold on the buyback excise.
Pass-through entities (LLCs, S corps, partnerships) are not directly affected — their income flows through to individual filers, where payroll tax and the income-tax ladder apply on the active-participation share. The pass-through-platform subpage documents how the substance test routes pass-through compensation.
Loss-making firms — the architecture taxes income, not activity. Small businesses below the published threshold for the book-minimum backstop. Pass-through entities below the active-participation threshold. The architecture is deliberately progressive: it applies first to the largest profitable firms and tapers to ordinary small business operations.
Domestic-only firms that today pay close to the headline rate face the smallest change. The architecture's bite falls on multinationals and large domestic firms that today drive their effective rate well below the headline through deduction-stacking — not on the corner restaurant or the regional manufacturer.
Pending canonical scoring (corporate revenue line on /scoring).
Three components compose the corporate revenue. The 28% permanent rate produces base corporate revenue at moderate level. The book-minimum backstop produces additional revenue from the deduction-stacking firms — historically a significant fraction of large-firm profits. The buyback excise produces both direct revenue and a behavioral shift toward dividends (which are then taxed as ordinary income at the shareholder level).
The Years 1–5 transition rate of 30% is fiscally important: it funds the VHA-Expansion overlap that bridges Distributed Healthcare deployment, providing approximately $62B/year × 5 years = $310B of additional cushion during the transition.
See tax ladder · fiscal scoring
- Transfer-pricing aggressive valuations
- Closed by the parallel book-minimum, which does not depend on transfer prices. Aggressive transfer pricing reduces taxable income but not financial-statement earnings — and the book minimum applies to the latter.
- Credit and deduction stacking
- Closed by the book-minimum floor. R&D credits, accelerated depreciation, foreign-tax credits, and NOL carryovers continue to exist — but their combined effect cannot drive the effective rate below 15% on book income.
- Buyback-financed earnings management
- Priced at 4%. Firms that repurchase shares to inflate EPS pay a fee scaled to the repurchase volume.
- Compensation declaration is binding
- Corporations must declare all compensation paid as a deduction; that declaration is the audit basis for the recipient's payroll tax withholding and income-tax filing. False statement is independently tax fraud — the layered enforcement architecture documented on the engine overview.
The book minimum is the architectural innovation. Detail rules continue to develop, but the principle is straightforward.
- VHA-Expansion (healthcare transition)
- The Years 1–5 30% transition rate funds the VHA-E overlap that bridges Distributed Healthcare deployment. Approximately $62B/year × 5 years = $310B of additional capacity.
- payroll tax
- Compensation deductible at the corporate level enters the recipient's payroll tax base on the same disclosed amount. Layered enforcement: false statement on either side is tax fraud.
- Institutional Investment Excise
- Parallel architecture for tax-exempt entity capital. Where C-corps pay corporate rate + book minimum on profits, tax-exempt institutions pay the institutional excise on investment portfolios above $5M.
- Financial Transactions Tax
- Corporate trading activity (mostly via brokerage subsidiaries) intersects with the FTT corridor (0.10–0.25% via the Speculation Brake macrogovernor).
- Pass-through-platform games
- S-corp shareholder-employee + low-salary patterns close through the substance test. Active-participation distributions enter payroll tax on the work substance.
The corporate rate is the entity-level instrument; payroll tax is the individual-level instrument; together they tax economic activity at every point of capture in a multi-entity structure. Owners simplify their structure if they want to be taxed only once.
Restored 28% corporate rate plus book-minimum reduces US competitiveness against lower-tax jurisdictions. The 2017 TCJA cut to 21% was justified on the grounds that the prior 35% rate drove inversions and offshore profit-shifting. Reversing the cut would predictably reverse some of those gains.
The book-minimum is OECD-aligned with the global minimum tax framework (OECD Pillar Two), which sets a 15% floor on multinational firms in participating jurisdictions. The Accord's 15% book minimum is the same floor, applied at home. The Alliance Incentive provides reciprocal market access for jurisdictions aligning corporate floors with the Accord's framework, reducing the inversion incentive.
Domestic firms gain from healthcare relief: payroll tax replaces the employer health-premium burden (averaging $17,000/covered worker), which today falls disproportionately on domestic operations. For most firms covering most of their workforce, the net change in total compensation cost is roughly flat or favorable. The corporate-tax change is paid against a gain in the labor-cost line.
The buyback excise at 4% is calibrated, not prohibitive. The signal it sends is clear: if you have surplus capital and want to return it to shareholders, dividends are the cheap path. The architecture prefers dividends because they're taxed at the shareholder level in the year received, supporting the comprehensive income-tax base.
Honesty about gaps. The Accord's credibility comes partly from explicit acknowledgment of what is not yet specified. The items below are flagged for v10.2 specification or for outside expert review.
- Book-minimum threshold: the dollar level of financial-statement earnings above which the 15% backstop bites is pending v10.2 specification. Today's IRA Corporate Alternative Minimum Tax applies to firms with $1B+ average annual income; the Accord's threshold may differ.