Sen. Elizabeth Warren (D-MA) is proposing a 15% minimum tax for corporations earning over $1 billion in profits.
A report from the progressive lawmaker’s office argued that large companies have “rigged” the tax code, permitting armies of accountants to avoid paying federal taxes:
In 2020, DISH Network — one of the most profitable companies in the United States — reported $2.6 billion in global profits and paid their founder and chairman almost $95 million. But the company paid no federal income tax and even received a $231 million tax refund from the U.S. government. That same year, the massive defense conglomerate Northrop Grumman made $3.7 billion. Its effective tax rate? 6.7% — less than one-third of the statutory corporate tax rate of 21%.
The “Corporate Profits Minimum Tax” would therefore channel profits toward the Biden administration’s domestic agenda:
In addition to making our tax code fairer, the CPMT will generate $319 billion over the next decade to invest in the American economy and support America’s workers and families. The CPMT is a core component of President Biden’s Build Back Better agenda, and requiring these companies to pay their fair share in taxes will help fund transformative investments in our country: universal pre-K, child-care, paid leave, tax credits for families, expanded Medicare coverage, and more.
Among the 70 eligible companies identified by the report are Amazon, Apple, Bank of America, Facebook, Google, Microsoft, Nvidia, PayPal, and Salesforce.
During The Wall Street Journal’s CEO Council Summit, Tesla and SpaceX chief executive Elon Musk presented the opposite view — that the government is incapable of effectively using resources toward productive ends.
“It does not make sense to take the job of capital allocation away from people who have demonstrated great skill in capital allocation, and give it to an entity that has demonstrated very poor skill in capital allocation, which is the government,” he commented. “Government is simply the biggest corporation, with the monopoly on violence.”
Earlier in the summit, Musk explained that the Senate should not pass the Build Back Better Act — the pending $1.75 trillion bill mentioned by Warren.
“I would say can this bill, don’t pass it. That’s my recommendation,” argued Musk. “If this bill happens or doesn’t happen, we don’t think about it at all really. Honestly it might be better if the bill doesn’t pass.”
The Build Back Better Act also incorporates $80 billion in funding for the Internal Revenue Service — which includes the hiring of 87,000 more IRS agents and more than 1.2 million new federal tax audits each year. A report from Republican members of the House Ways & Means Committee notes that Americans would therefore be twice as likely to experience IRS audits should the provision become law.
“Nearly half of these audits — over 583,000 — would be on Americans making up to $75,000 a year,” says the report. “Even the lowest income Americans would see more audits with a quarter of these audits — over 313,000 — hitting Americans making up to $25,000 per year. This also will mean more than 800,000 more federal tax liens on taxpayer property such as homes and vehicles.”