Yuval Rosenberg
Wed, August 3, 2022
Three new polls find that Americans overwhelmingly support the new Inflation Reduction Act negotiated by Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV).
A Yahoo News/YouGov poll found that 61% of Americans favor the proposals to allow Medicare to negotiate drug prices and cap out-of-pocket costs at $2,000 a year. And 53% favor the corporate tax increases and deficit reduction in the legislation.
“At a time of bitter polarization, these are strikingly positive results for any bill explicitly associated with one party and not the other,” Yahoo’s Andrew Romano writes. “Independents support each element of the Manchin-Schumer deal by the same wide margins as Americans overall — and even a plurality of Republicans favor (47%) rather than oppose (27%) its prescription-drug reforms.”
Similarly, a poll by liberal group Data for Progress finds that 73% of likely voters support the legislation when told it will lower costs for families, ramp up clean energy production, lower prescription drug costs and reduce the deficit.
And a Navigator Research poll, conducted by the Democratic firm Global Strategy Group and obtained by HuffPost, found that about two-thirds of voters support the plan while 24% oppose it.
Senate bill would close a loophole that helps multinational giants avoid paying their share of taxes
David Morse - Wednesday
Senate bill would close a loophole that helps multinational giants avoid paying their share of taxes
OUTSIDE THE BOX
After many weeks of objecting to President Joe Biden’s climate agenda, Sen. Joe Manchin (D-WV) surprised Washington by agreeing to an “Inflation Reduction Act” that contains $369 billion worth of climate and energy programs. Manchin’s about-face follows an agreement with Sen. Chuck Schumer (D-NY) to include $300 billion for deficit reduction as well as numerous tax credits for electric vehicles and solar panels.
While the media has focused on Manchin’s unexpected change-of-heart, a key part of the bill might be an even greater surprise to Washington. That’s because it deals with corporate tax avoidance—and includes language calling for a 15% “corporate alternative minimum tax” (AMT).
Read more: What’s in, and out, of Democrats’ $739 billion inflation-fighting package
4.3% effective tax rate
At present, some of America’s largest corporations are earning record profits while paying little U.S. corporate taxes. Voters are frustrated by this, particularly the example of Amazon —which earned $45 billion in corporate profits over the past three years while paying only 4.3% in federal taxes. That’s far less than the roughly 21% paid by smaller domestic U.S. firms.
What this points to is the ongoing problem of overseas entities avoiding America’s corporate taxes while earning large profits in the U.S. consumer market. The American public knows that global corporations have been getting away with this for years—that they simply pay far less in effective taxes than domestic businesses. What remains to be seen is whether the new corporate alternative minimum tax proposed by Schumer and Manchin can finally solve this problem.
Recently, Congress’s Joint Committee on Taxation published an analysis of the Manchin-Schumer proposal. Specifically, they looked at who will pay the AMT tax—which kinds of corporation and which tax brackets. Unfortunately, their study failed to address a key point—America’s current tax system rewards overseas producers at the expense of domestic U.S. firms.
In 2020, the Coalition for a Prosperous America reported that global multinational companies paid an effective tax rate of only 8.7% in 2019. In comparison, domestic companies pay a rate far closer to the nominal 21% corporate tax. Multinationals simply shift profits to tax-haven nations, leaving them with lower effective U.S. tax rates.
David Morse - Wednesday
Senate bill would close a loophole that helps multinational giants avoid paying their share of taxes
OUTSIDE THE BOX
After many weeks of objecting to President Joe Biden’s climate agenda, Sen. Joe Manchin (D-WV) surprised Washington by agreeing to an “Inflation Reduction Act” that contains $369 billion worth of climate and energy programs. Manchin’s about-face follows an agreement with Sen. Chuck Schumer (D-NY) to include $300 billion for deficit reduction as well as numerous tax credits for electric vehicles and solar panels.
While the media has focused on Manchin’s unexpected change-of-heart, a key part of the bill might be an even greater surprise to Washington. That’s because it deals with corporate tax avoidance—and includes language calling for a 15% “corporate alternative minimum tax” (AMT).
Read more: What’s in, and out, of Democrats’ $739 billion inflation-fighting package
4.3% effective tax rate
At present, some of America’s largest corporations are earning record profits while paying little U.S. corporate taxes. Voters are frustrated by this, particularly the example of Amazon —which earned $45 billion in corporate profits over the past three years while paying only 4.3% in federal taxes. That’s far less than the roughly 21% paid by smaller domestic U.S. firms.
What this points to is the ongoing problem of overseas entities avoiding America’s corporate taxes while earning large profits in the U.S. consumer market. The American public knows that global corporations have been getting away with this for years—that they simply pay far less in effective taxes than domestic businesses. What remains to be seen is whether the new corporate alternative minimum tax proposed by Schumer and Manchin can finally solve this problem.
Recently, Congress’s Joint Committee on Taxation published an analysis of the Manchin-Schumer proposal. Specifically, they looked at who will pay the AMT tax—which kinds of corporation and which tax brackets. Unfortunately, their study failed to address a key point—America’s current tax system rewards overseas producers at the expense of domestic U.S. firms.
In 2020, the Coalition for a Prosperous America reported that global multinational companies paid an effective tax rate of only 8.7% in 2019. In comparison, domestic companies pay a rate far closer to the nominal 21% corporate tax. Multinationals simply shift profits to tax-haven nations, leaving them with lower effective U.S. tax rates.
Unfair competition
What Manchin and Schumer propose is a 15% minimum tax that would apply to corporations with annual profits in excess of $1 billion. That means large companies like Amazon would now face at least a 15% corporate tax rate, no matter their attempts to bypass U.S. tax obligations.
For too long, Washington has ignored this glaring disparity in effective tax rates between domestic corporations and global enterprises. This has been particularly troubling for smaller U.S. companies, since they employ the bulk of the U.S. workforce while facing a particularly uneven tax environment compared to their overseas competitors.
Can Manchin’s and Schumer’s bill help to partially fix this problem?
Their proposed legislation requires the largest companies to pay a minimum of 15 percent of their income as reported to shareholders. That’s certainly helpful, since it’s far closer to what domestic U.S. corporations are obligated to pay. And the bill only applies to companies that earn annual profits exceeding $1 billion over three years.
This is good news, since it will largely fall on the multinationals that currently skirt U.S. tax obligations. Domestic companies should welcome this development since it would help to change the present tax environment that benefits their foreign competitors.
There may be better options in the future, but right now U.S. domestic corporations urgently need a level playing field. Insisting that their overseas counterparts finally pay their fair share of taxes is long overdue. A corporate alternative minimum tax marks an important step toward restoring tax parity for U.S. producers.
David Morse is tax policy director at the Coalition for a Prosperous America Education Fund. Follow him at @CentristinIdaho
What Manchin and Schumer propose is a 15% minimum tax that would apply to corporations with annual profits in excess of $1 billion. That means large companies like Amazon would now face at least a 15% corporate tax rate, no matter their attempts to bypass U.S. tax obligations.
For too long, Washington has ignored this glaring disparity in effective tax rates between domestic corporations and global enterprises. This has been particularly troubling for smaller U.S. companies, since they employ the bulk of the U.S. workforce while facing a particularly uneven tax environment compared to their overseas competitors.
Can Manchin’s and Schumer’s bill help to partially fix this problem?
Their proposed legislation requires the largest companies to pay a minimum of 15 percent of their income as reported to shareholders. That’s certainly helpful, since it’s far closer to what domestic U.S. corporations are obligated to pay. And the bill only applies to companies that earn annual profits exceeding $1 billion over three years.
This is good news, since it will largely fall on the multinationals that currently skirt U.S. tax obligations. Domestic companies should welcome this development since it would help to change the present tax environment that benefits their foreign competitors.
There may be better options in the future, but right now U.S. domestic corporations urgently need a level playing field. Insisting that their overseas counterparts finally pay their fair share of taxes is long overdue. A corporate alternative minimum tax marks an important step toward restoring tax parity for U.S. producers.
David Morse is tax policy director at the Coalition for a Prosperous America Education Fund. Follow him at @CentristinIdaho
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