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Archive for Lower Corporate Tax Rate

Lowering A Corporation’s Effective Tax Rate With Tax Credits

Michael Korengold GOLD

Corporate Tax Directors are in a unique position to add immense value by exploring ways to lower their corporation’s effective tax rate.  Tax Directors must walk a fine line of getting this important mission accomplished or being too creative in taking unnecessary risks.

Insured Tax Credit Investments provide a practical option to lower a corporation’s effective tax rate with the downside covered by insurance.

How do Tax Credits work?

  • Tax credit programs are government sponsored initiatives designed to encourage taxpayers to help finance solar projects, historic building redevelopment and affordable housing
  • Corporate taxpayer repurposes tax payment reserves into qualifying tax credit projects
  • Taxpayer receives tax credits, project cash flows and an exit payment
  • Tax credit investors generate a return on their tax payments, thus boosting their after-tax income and lowering their effective tax rate
  • Returns are predominantly uncorrelated with project performance – taxpayers earn the tax credits as long as the project maintains regulatory compliance.
  • An insurance policy eliminates the compliance risk and, as such, allows a taxpayer to generate a yield on their tax payments without the risk of losing the tax credits 

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