Well, guess what? You will be paying more for running the federal government than a bunch of big American corporations that made billions of dollars in profits in the last year.
Yes, but not very many fit into that classification. Best not to mislead the american public by implying that this is common.
Note here that Ms. Warren did not pick Occidental by accident; they are in the “Mining” category, which *does* pay unusually low tax rates, as the government has seen fit to not hamstring the private US oil industry as they compete against heavily subsidized national oil companies in other areas.
The wisdom of this can be debated; what cannot be debated is that oil companies are an outlier, and not typical.
That’s why I’m proposing a big new idea: the Real Corporate Profits Tax. This new tax applies to the profits very large American companies report to their investors — with no loopholes or exemptions. It will make our biggest and most profitable corporations pay more and ensure that none of them can ever make billions and pay zero taxes again.
This new tax only applies to companies that report more than $100 million in profits — about the 1200 most profitable firms in the country last year. That first $100 million is left alone, but for every dollar of profit above $100 million, the corporation will pay a 7% tax. Any company profitable enough to hit the Real Corporate Profits Tax will pay that tax in addition to whatever its liability might be under our current corporate tax rules.
What you’re suggesting, essentially, is that there be a sort of Alternative Minimum Tax for corporations. There’s some logic behind that, I suppose, as long as everyone realizes that every company who (a) gets hit by it, and (b) has pricing power will (c ) just raise prices to charge the tax to the consumer. (Oil companies have no pricing power; other industries do.)
And further…. you run the risk of competitive industries losing ground to foreign competition. It’s important to lay out all the pros and cons, don’t you agree?
It’s a small new tax — but because our richest, biggest corporations are so skilled at minimizing their taxes under our current system, that small new tax will generate big new revenue. According to an estimate from economists Emmanuel Saez and Gabriel Zucman at the University of California-Berkeley, the tax will bring in $1 trillion in revenue over the next ten years — just from the massive profits of the thousand or so richest companies in the country.
It’s a small tax, period. $1T over 10 years sounds big, but our average annual deficit over the next 10 year will be over 10 TIMES that amount. So, you’re cutting the annual deficit by about 8% per year with this idea.
And as we all know, if you don’t want to cut spending substantially (which is generally referred to as “austerity”)……the only way to close that deficit is by raising middle class tax rates by a lot.
And I strongly opposed the recent Republican tax bill, which has led to a huge drop in the amount of taxes we collect from corporations.
Yea. Which was weird, because you supported the corporate tax cut bill when Obama proposed it.
Also, perspective matters. The amount we collect from corporations dropped 20%. However, corporation taxes do not account for a large amount of money flowing into Treasury:
So, before we did corporate tax reform in 2017, the US got 9% of it’s income from the corporate tax. In 2018, that dropped to 6%, BUT, there are also substantial benefits gleaned by the workforce that offset that loss. Forbes writes:
Some estimates are that 70% of the corporate income tax burden is borne by workers through lower wages while 30% is borne by owners of capital — both fat cats and middle-income investors.
Martin Feldstein made a valuable contribution to the discussion in a recent Wall Street Journal article. He pointed out that cutting the corporate tax cut would result in benefits to economic growth that were slow but steady, cumulative and compounding. It will not be a short-run stimulus as Keynesians hope to find, but it will grow the economy — and wages — over a 10-year horizon.
(I’ll just note here that after 8 years of economic expansion without wage growth, we’ve *finally* started to see some wage appreciation after corporate tax reform…..and leave that there.)
You might be wondering: why not just raise the corporate tax rate instead of creating this new tax? The answer is that our corporate tax code is so littered with loopholes that simply raising the regular corporate tax rate alone is not enough.
Shame on you. You know full well that the reason is that the *vast* majority of corporations, pretty much except for the very large ones, pay their full share of taxes, as they don’t qualify for “loopholes”. If you raise rates across the board, you penalize the corporations who actually *needed* that tax cut in order to compete.
Instead, you chose to feed raw meat to your fellow travellers by demonizing the tax code and corporations, accountants and lobbyists. For shame. (And then you go on to admit all the above yourself.)
(Shakes head.) And they wonder why we vote for the other guys…….