Corporate profits

Elizabeth Warren targets corporate profits with new 7% surtax proposal

Senator Elizabeth Warren (D-MA), one of many Democrats to run for the party’s nomination in the 2020 presidential race, detailed progressive political ideas on workplace issues, including government financial support for working parents to cover childcare costs.

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Elizabeth Warren, the economic policy maker in the Democratic presidential primary, wants to raise $ 1 trillion in government revenue through a new 7% surtax on the profits of the largest corporations.

What the Massachusetts senator calls “the actual corporate income tax” would apply to worldwide profits in excess of $ 100 million. The goal, she says, is to bolster government coffers by preventing corporate giants from exploiting loopholes to avoid federal taxation following the significant tax cut passed by President Donald Trump and a Congress controlled by the GOP in December 2017.

“This will make our biggest and most profitable companies pay more and ensure that none of them can ever make billions again and pay zero taxes again,” Warren wrote in a post Thursday morning in Medium. . “To increase the revenue we need – and to make sure every business pays its fair share – we need a new kind of tax that big business can’t get around.”

Trump’s tax cut, following corporate demands for a more globally competitive U.S. system, reduced the top tax rate from 35% to 21%. But the remaining deductions in the IRS code allow some large companies to reduce their effective rates well below that – in some cases down to zero.

Read more: Elizabeth Warren’s 2020 Campaign Raises $ 6 Million in Q1

To concern: How Amazon Paid $ 0 Federal Income Tax in 2018

Warren cited two high-profile examples: Amazon reported $ 10 billion in profits in 2018, but no corporate taxes in the United States; Occidental Petroleum reported $ 4.1 billion in profits and also paid none.

Its new surtax would prevent them and other companies with profits exceeding $ 100 million from erasing their tax obligations. Instead of corporate taxable income as defined by the IRS, the 7% surtax would apply to profits that corporations report to their investors.

“Amazon pays all the taxes we are required to pay in the United States and in all the countries where we operate, including paying $ 2.6 billion in corporate tax and filing $ 3.4 billion in tax expenditures over the past three years, ”an Amazon spokesperson said.

Because stock values ​​and executive compensation are based on these public reports, Warren says, companies don’t hide their real profits from shareholders with the depreciation they use for the IRS. These include large deductions for depreciation, the value of stock options and offshore tax shelters.

The new surcharge would be separate from the existing corporate tax. If implemented in 2018, Warren said, Amazon would owe $ 698 million and Occidental Petroleum $ 280 million.

In a letter published by Warren associates, University of California Berkeley economists Emmanuel Saez and Gabriel Zucman estimated that 1,200 state-owned enterprises would be subject to the tax if it took effect in 2019. Warren said that she had designed it to avoid hitting small businesses or even large ones. those who have a lower than average year.

Warren’s aides said they were unaware of previous attempts to pass such a tax. But they pointed out that polls showed strong public support for big corporations to pay more – even within a GOP increasingly reliant on blue-collar voters.

Read more: “How about you pay your taxes?” —Walmart responds to Amazon salary challenge

His proposals, like the big plans of the other Democratic candidates for 2020, have no chance of being promulgated in the next two years. But they do signal ideas that would take center stage if a Democrat won the presidency in 2020 and the party took control of Congress.

Warren has already proposed a substantial increase in property taxes to help finance the expansion of the supply of affordable housing and a wealth tax for wealthier Americans.

The wealth tax would bring in $ 2.7 trillion over 10 years, according to projections. About $ 700 million in wealth tax would fund its proposal for universal child care and early childhood education. That would leave him $ 2 trillion for deficit reduction or additional spending plans not yet announced.

Warren also did not specify how she would spend the $ 1 trillion over 10 years generated by the corporate earnings surtax. This brings the total new revenue available under its proposals to $ 3 trillion.

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