At least 70 of America’s biggest companies would pay more tax under a new minimum tax Democrats are proposing as a way to pay for the spending bill going through Congress, according to an analysis released by Senator Elizabeth Warren, Democrat of Massachusetts on Thursday.
The report offers a first look at companies that could face higher tax burdens under the proposal, which calls for the passage of a minimum tax of 15% on companies that declare more than $ 1 billion. in profits to shareholders, even though they have no federal tax payable. The plan is included as a source of revenue in a $ 1.85 trillion social policy and climate bill that President Biden is trying to push through Congress.
The new tax would apply to so-called accounting income that companies report to their shareholders but not to the IRS. .
The tax on books aims to raise funds from businesses without increasing the corporate tax rate by 21%. While Mr Biden initially pledged to raise the corporate tax rate to 28%, moderate Democrats have resisted the proposal.
Ms Warren’s report found that the tax would force companies such as Amazon, FedEx, Google, Facebook, General Motors, T-Mobile and Verizon to pay more to the US government. A recent report from the Joint Committee on Taxation determined that the proposal would generate $ 319 billion over 10 years.
âThe big companies have figured out how to play with the system so that the costs of running this country are borne by hard-working families, while these big companies are getting all the profits and paying little or nothing in taxes,â Ms. Warren in an interview. . âIt’s time to end it.
Ms Warren’s office used data compiled by the non-partisan Institute on Taxation and Economic Policy on publicly traded Fortune 500 and S&P 500 companies. The analysis viewed “taxes paid” as the burden. a company’s current income tax, or how much they paid in the United States federal and foreign taxes in 2020.
According to Ms. Warren’s analysis, Amazon was able to reduce its tax rate to 11.5% from 21% in 2020. The tech company reportedly paid $ 836 million more in federal and foreign income taxes. whether the minimum tax had been in place, according to Ms. Warren’s analysis. Amazon declined to comment.
The report also found that FedEx had an effective tax rate of 7.2% and, had the new tax been in place, would have paid $ 518 million more in taxes in 2020. FedEx said the analysis was “premature” and that she paid all costs. taxes he owed.
“Until there are clear details on the calculation of this proposed minimum corporate tax, it is premature to assume or estimate how the tax would apply to specific companies,” Chris said. Allen, spokesperson for FedEx, in a statement.
Opponents of the new tax have expressed fears that it will no longer give control over the US tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.
“The potential politicization of the FASB is likely to lead to substandard financial accounting standards and substandard financial accounting profits,” according to a letter to members of Congress from more than 260 accounting academics.
The group also warned that under the new proposal, companies would be likely to report lower profits to their shareholders in order to lower their tax bill. They suggested that the idea of ââusing book income as an alternative tax base is too complex.
“It would be cleaner and simpler to simply correct the tax code if there are perceived problems with the tax system,” they wrote.