“What member of Congress would say, ‘you know what would get my vote on tax reform? You need to undermine the most popular part of the tax code, the R&D tax credit,”’ McCloskey said Monday in an interview. Addressing the AMT will be one of her group’s “top priorities” going forward, she said.

‘Work as Intended’

Julia Lawless, a spokeswoman for the tax-writing Senate Finance Committee, said
lawmakers would work to make sure that tax breaks -- like the Research and Development tax credit -- “work as intended.”

“The goal of this bill is to ensure American job creators can successfully compete around the globe,” Lawless said.

House and Senate leaders this week will begin working on a compromise between their differing versions of tax legislation -- with the goal of delivering agreed-upon legislation to President Donald Trump before the end of this year. One key difference will be the corporate AMT -- which would be repealed under the bill that the House approved last month.

The levy is designed to prevent companies from using deductions, making it essentially a flat rate that can’t be substantially lowered. Without the AMT, companies could use various deductions proposed in the Senate bill -- including provisions for intellectual property and for research and development -- to winnow their tax bills. But because of the way the AMT is calculated, it would snare virtually every company under the bill, according to tax experts.

‘Foreign-Derived’ Income

In other words, a company’s tax bill that’s based on a 20 percent AMT, which doesn’t allow many deductions, would always be higher than the same company’s bill at the regular 20 percent corporate rate -- which would allow various deductions that would lower the ultimate bill.

Such deductions would include a measure designed to induce companies that rely on intellectual property to house it in the U.S., instead of with overseas units. Situating such intangible property offshore with subsidiaries in low-tax jurisdictions -- and then paying those subsidiaries for its use -- has been a key tax-cutting strategy for many such companies.

The Senate bill seeks to address that strategy by setting up a special, discounted tax rate of 12.5 percent for “foreign-derived” income related to IP -- provision that experts say could prompt more companies to hold such property in the U.S.