Democrats’ spending bill aims to collect minimum taxes from large, profitable corporations.

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Democrats’ spending bill aims to collect minimum taxes from large, profitable corporations.

At least 70 of America’s largest companies will pay more in taxes under a new minimum tax, according to an analysis released by Senator Elizabeth Warren, a Democrat from Massachusetts, as a way to pay for a spending bill running through Democrat Congress. are proposed in. Thursday.

The report takes a first look at which companies may face higher tax bills under the proposal, which calls for a 15 percent minimum tax to be applied to companies that generate more than $1 billion in profits to shareholders. report even though they have zero federal tax liability. The plan is included as a source of revenue in the $1.85 trillion social policy and climate bill that President Biden is trying to push through Congress.

The new tax will apply to so-called book income that companies report to their shareholders but not to the IRS. ,

The purpose of book tax is to raise money from companies without increasing the corporate tax rate to 21 per cent. While Mr Biden originally promised to raise the corporate tax rate to 28 percent, moderate Democrats have opposed that proposal.

Ms. Warren’s report found the tax would require companies such as Amazon, FedEx, Google, Facebook, General Motors, T-Mobile and Verizon to pay more to the United States government. A recent report by the Joint Committee on Taxation determined that the proposal would generate $319 billion over 10 years.

Ms. Warren said in an interview, “Giant corporations have figured out how to run this system so that the cost of running this country is borne by hardworking families, while these large corporations all churn out profits and slash taxes. give little or nothing.” , “It’s time to put a stop to that.”

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Ms Warren’s office used data compiled by the nonpartisan Institute on Taxation and Economic Policy on publicly traded companies in the Fortune 500 and S&P 500. The analysis considered “taxes paid” as a company’s current income tax expense, or how much they paid in US federal taxes and foreign taxes in 2020.

According to Ms. Warren’s analysis, Amazon was able to reduce its tax rate to 11.5 percent in 2020 instead of 21 percent. The tech company would have paid $836 million more in federal and foreign income taxes, according to which minimum tax applies. Ms. Warren’s analysis. Amazon declined to comment.

The report also found that FedEx had an effective tax rate of 7.2 percent and, if the new tax was in place, would have paid $518 million more in taxes in 2020. FedEx said the analysis was “premature” and that it all paid off. tax is due.

“Unless there are clear details on the calculation of this proposed corporate minimum tax, it is premature to speculate or estimate how the tax will apply to specific companies,” FedEx spokesman Chris Allen said in a statement.

Opponents of the new tax expressed concern that it would give more control over the US tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.

According to a letter to members of Congress of more than 260 accounting academics, “Potential politicization of the FASB will likely result in lower-quality financial accounting standards and lower-quality financial accounting income.”

The group also warned that under the new proposal, companies may report smaller profits to their shareholders to reduce their tax bills. He suggested that the idea of ​​using book income as an alternative tax base is overly complicated.

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“If there are perceived problems with the tax system, the tax code will be clean and easy to fix,” he wrote.

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