This week, Colorado U.S. Senator Michael Bennet, a member of the U.S. Senate Finance Committee, and a group of his colleagues, including U.S. Senators Elizabeth Warren (D-Mass.), Angus King (I-Maine), Ron Wyden (D-Ore.), Ed Markey (D-Mass.) and Sheldon Whitehouse (D-R.I.), introduced legislation to prevent America’s largest corporations from paying nothing in federal taxes.
The Corporate Profits Minimum Tax establishes a new corporate minimum tax that would strengthen our economy and create a fairer tax system. Bennet and his colleagues are pushing to include the bill as a revenue raiser in the Build Back Better budget.
“For the last fifty years, our economy has worked really well for large corporations and the wealthy, while American families and workers have been left behind,” said Bennet. “In that time, we’ve seen income inequality grow and social mobility fall. To build an economy that provides opportunity for everyone — not just those at the top — the largest corporations need to 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, 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 Corporate Profits Minimum Tax would ensure companies that report over $1 billion in profits to shareholders pay at least a 15% tax rate on those gigantic profits. Based on estimates for similar proposals, this bill would generate hundreds of billions in revenue over ten years. Establishing the 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 Corporate Profits Minimum Tax would:
- Apply to roughly 200 companies that report over $1 billion in profits;
- Create a 15% minimum tax on the profits that these giant companies report to their shareholders;
- Preserve the value of select business credits – including R&D, clean energy, and housing tax credits – and include some flexibilities for companies to carry forward losses, utilize foreign tax credits, and claim a minimum tax credit against regular tax in future years;
- Raise hundreds of billions in revenue over 10 years.
The bill text is available here.
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