As Democrats run out of options to fund their reconciliation bill, key senators including Senator Elizabeth Warren (D-Massachusetts) have introduced a bill that would ensure big corporations pay a rate minimum tax. This would prevent companies from exploiting the tax system to pay a zero or negative effective tax rate.
Minimum corporate income tax would take a minimum 15 percent tax on profits over $ 1 billion based on the profits companies report to shareholders, or accounting profits – rather than the profits companies report to the government, which they often deflates to dodge higher tax rates. The tax would apply to around 200 companies and could net the government in the hundreds of billions over the next decade, according to lawmakers.
The statutory corporate tax rate of 21%, reduced by 35% by Republicans in 2017, would not be affected by this proposal. Senator Kyrsten Sinema (D-Arizona) has strongly opposed the increase in the corporate tax rate because she likes close relationship with conservative pressure groups and businesses.
“Giant corporations have been exploiting tax loopholes for too long, and it’s time they paid their fair share to help run this country, like everyone else,” Warren said. “The minimum corporate income tax would end double business transactions and ensure that companies pay something in taxes when they report billions in profits to their shareholders.”
The co-initiator of the bill, Sen. Angus King (I-Maine), stressed that business should play a larger role in financing the government. “In 1965, companies paid about 4% of the country’s GDP in state and federal income taxes. Today that rate is only 1%, ”King said. “This massive decline has contributed to the nation’s debt buildup and threatened basic public services Americans rely on.”
The bill is similar to a proposal that Warren introduced earlier this year, which would create a 7% tax on every dollar of profit over $ 100 million that companies report to their shareholders. This bill is slightly more expensive and could bring in $ 700 billion over a decade.
This week’s legislation was introduced by Warren and King and Senate Finance Committee Chairman Ron Wyden (D-Oregon). Wyden is a key figure in the reconciliation bill as he chairs the committee tasked with developing the bill’s tax proposals. The proposal is co-sponsored by Senators Michael Bennet (D-Colorado), Ed Markey (D-Massachusetts) and Sheldon Whitehouse (D-Rhode Island).
The proposition is similar to a proposition that the The White House has advocated in recent weeks, as Democrats scramble to find tax proposals that could pay off the reconciliation bill. With Sinema and Senator Joe Manchin (D-West Virginia) opposite proposals to raise tax rates for corporations and the wealthy – and with Sinema opposing the extremely popular, a crucial revenue increase proposal for falling prescription drug prices – Democrats must come up with increasingly obscure ways to increase their income.
Sinema is surprisingly in favor minimum corporate tax. “This proposal represents a common sense step in ensuring that highly profitable companies – which can sometimes avoid the current corporate tax rate – pay a reasonable minimum tax on their profits,” she said in a statement.
Sinema’s statement is ironic given that his opposition to increasing corporate taxes is part of the reason companies can avoid paying taxes because the low rate makes it easier for companies to reduce their tax rate. effective taxation. In addition, she showed little interest by closing loopholes that allow companies to dodge the statutory tax rate, suggesting that his statement may be misleading.
Yet garnering support for Sinema is huge in politics today, as she and Manchin are Democrats’ biggest obstacles to passing bills in Congress. The duo have already made their way with the reconciliation bill, managing to cut him off from nearly half despite the objections of progressive lawmakers.
While no Democrats have opposed the tax proposal, it is not clear whether Manchin supports it. Electrical outlets reported earlier this week that Manchin was generally in favor of the White House proposals for a minimum corporate tax and a billionaire tax, but more recent reports found that Manchin may not in fact be in favor of the billionaire tax, which would only levy a tax on the investment income of the richest 0.0002 percent of Americans.