Corporate profits

Democrats renew calls for minimum tax on corporate profits after Tesla report

Democratic lawmakers are renewing calls to tax corporate profits after revelations that Tesla won’t pay any taxes to the federal government, despite earning nearly $6 billion in profits last year.

Senator Elizabeth Warren, Democrat of Massachusetts, said Tesla’s tax revelations are troubling, especially because the company has received millions in government grants.

“After years of government support, Tesla had its most profitable year ever, but it won’t contribute a dime to federal taxes,” Ms. Warren said. “Freeloading must stop – and I am fighting to close international tax loopholes and establish a minimum tax on corporate profits.”

Tesla’s annual filing with the Securities and Exchange Commission says the company reported net income of $5.5 billion in 2021. It will end up paying just $9 million in state taxes and zero in federal because of the characteristics of the current tax code.

Tesla, in particular, says its domestic operations lost $130 million last year before taxes. When it posted similar losses over the past decade, the company was able to write off most of its earnings from last year.

Tesla did not immediately respond to requests for comment from The Washington Times.

Democrats, like Ms Warren, say the delistings are the result of the 2017 Tax Cuts and Jobs Act passed under former President Donald Trump.

“The GOP cut taxes on corporations moving profits and jobs overseas,” Ms. Warren said. “I will continue to fight to prevent giant corporations from using scams and loopholes to avoid paying a fair share.”

To make sure companies like Tesla pay more taxes, Democrats are proposing a 15% tax on corporate profits. The flat rate would apply to companies that publicly report more than $1 billion in profits over three years.

Proponents say the new tax would target more than 200 U.S. companies, raising around $300 billion to $400 billion over the next decade.

A similar proposal was included in Mr. Biden’s $1.75 trillion social welfare and climate change bill last year, but the entire package failed to pass.

Democratic lawmakers are eager to relaunch the spending package in some format. For the deal to go through, however, all 50 Democrats will be needed for it to pass along party lines.

As part of those negotiations, Democrats are pushing for an expansion of taxpayer subsidies to makers of electric vehicles to fight climate change. Expansion would probably only add to The Tesla advantage.