US Senate News:
Source: United States Senator for Maine Angus King
WASHINGTON, D.C. —U.S. Senator Angus King is introducing legislation with a number of his colleagues to prevents America’s largest corporations from paying nothing in federal taxes. The Real Corporate Profits Minimum Tax Act establishes a new corporate minimum tax that would strengthen our economy and create a fairer tax system. Senator King, along with Senator Elizabeth Warren (D-Mass.) and Senate Finance Chair Ron Wyden (D-Ore.), are pushing to include the bill as a revenue source for the Build Back Better package.
Senators King and Warren, along with Representative Don Beyer (D-Va.), previously introduced the Real Corporate Profits Tax Act, and have engaged extensively with Chair Wyden, the White House, and the Treasury Department to develop this updated proposal for inclusion in the Build Back Better bill.
“In 1965, corporations paid roughly 4% of the nation’s GDP in state and federal income tax. Today, that rate is only 1%,” said Senator King. “This massive decline has contributed to the nation’s rising debt and threatened basic public sector services Americans rely upon. Corporations should not be able to access America’s wealthy consumer market, talented labor pool, and other benefits without paying to support the conditions that make the U.S. the world’s premier place to do business – but many profitable, U.S.-based corporations pay zero federal corporate income tax. Our proposal is about simple fiscal sense and common fairness, creating a reasonable floor on tax payments to make sure profitable corporations with profits over $1 billion pay their fair share.”
Currently, the U.S. tax code ??allows large corporations to pay little or no tax because they are able to exploit a host of loopholes, deductions, and exemptions to drive down their tax liability. While these companies report billions in profits on their financial statements, they often pay no income tax to the IRS and leave hardworking families holding the bag.
For example, over the last three years, Amazon reported $45 billion in profits, including a record $20 billion last year as families struggled through the pandemic. But the effective tax rate it paid on those profits was just 4.3% – well below the 21% corporate tax rate. In fact, in 2018, Amazon didn’t pay any federal income tax at all. Amazon isn’t alone: between 2008 and 2015, 40% of our biggest companies paid zero or less in federal taxes in at least one year, even while they were telling their shareholders they were wildly profitable. This trend continued last year throughout the pandemic, with 55 companies that reported a cumulative total of $40 billion in pretax income receiving a net $3.5 billion back from the government in rebates.
The Real Corporate Profits Minimum Tax Act would ensure companies that report over $1 billion in profits to shareholders pay at least a 15% tax rate on those gigantic profits. According to Treasury Department estimates, this proposal would generate over $300 billion in revenue over ten years. Establishing the Real Corporate Profits Minimum Tax would not only put an end to profitable corporations getting away with paying zero (or less) in taxes; it would also generate revenue needed to invest in child care, clean jobs, and more – investments that make American companies more competitive and our economy more resilient.
Specifically, the Real Corporate Profits Minimum Tax Act would:
· Apply to roughly 300 companies that report over $1 billion in profits to their shareholders;
· Create a 15% minimum tax on the profits that these giant companies report to their shareholders;
· Preserve the value of business credits – including R&D, clean energy, and housing tax credits – and include some flexibilities for companies to carry forward losses and claim a minimum tax credit against regular tax in future years;
· Raise over $300 billion in revenue over 10 years.
Senator Michael Bennet (D-Colo.) is also a cosponsor.