The tax wonks have taken a look at Joe Biden’s corporate tax plan—and it appears Corporate America could be in for a rude awakening.
The Democratic presidential nominee is proposing changes to the corporate tax code that would prevent some of America’s largest corporations from using legal loopholes to reduce their federal income tax liabilities to near-zero.
In addition to raising the corporate tax rate to 28%, from 21% currently, Biden’s plan would set a minimum tax of 15% on companies’ “book income,” or profits reported to investors, the Wall Street Journalreported Tuesday. It would also double the existing tax rate on foreign profits reported by U.S. Firms, from 10.5% to 21%, according to an analysis by the Tax Policy Center.
The moves would effectively reverse the Trump administration’s significant overhaul of U.S. Corporate tax laws, via the Tax Cuts and Jobs Act of 2017. Coupled with income and payroll tax increases on high-income individuals, plus other proposals, the Biden plan would increase federal revenues by $4 trillion through 2030, according to the Tax Policy Center.
It would also likely spell an end to an era that has seen hugely profitable corporate behemoths like Amazonuse the tax code to their advantage—and in the process lower their federal income tax bill to a relatively minimal amount.
Amazon, for its part, has previously shot back at the Biden campaign’s attacks on its tax practices. And there are no shortage of critics who claim that corporate tax policies like those proposed by the Biden campaign discourage companies from using tax breaks meant to incentivize investments that create jobs and bolster the U.S. Economy.
How do CEOs of America’s largest companies feel? According to data from the Center for Responsive Politics, most of the biggest political donors who lead S&P 500 firms ramped up their donations to GOP fundraising groups during the second quarter.