Kamala Harris confirmed she wants her administration to raise the corporate tax from 21% to 28%:
The Harris campaign confirmed to Fox News that the vice president is proposing to raise the rate that major businesses pay from 21% to 28%, describing it as “a fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share.””As President, Kamala Harris will focus on creating an opportunity economy for the middle class that advances their economic security, stability, and dignity,” campaign spokesperson James Singer said in a statement.The move, if it were to become law, would likely raise hundreds of billions of dollars, according to projections from the nonpartisan Congressional Budget Office.The announcement comes as Harris is beginning to offer details on how she’d govern if she is elected president and how she would try to pay for expensive ideas she proposed last week, including expanding the child tax credit and easing the cost of homeownership and lowering medical debt.
I laughed. Do you know why?
No corporation would ever pay the taxes.
Look, if you want corporations or anyone to pay their “fair share” then you scrap the tax code.
The tax code is filled with write-offs and deductions. Corporations and the rich have the best accountants to ensure they mark off everyone who applies.
Investopedia wrote in 2023 that numerous big corporations have not paid income tax for the past three years. Three of those companies are Nike, FedEx, and Salesforce.
In May, USA Today listed Tesla, Netflix, and Ford out of the 35 corporations that haven’t paid income tax in five years.
Offshore Profits:
Profit shifting to lower-tax countries reduced taxable income reported in the U.S. by $300 billion annually, the Congressional Budget Office estimated in 2018, and changes under the TCJA [Tax Cuts and Jobs Act of 2017] were expected to slow the annual profit shifting by $65 billion.At the statutory 21% U.S. tax rate, this $65 billion in reported profits not shifted abroad as a result of the TCJA would produce annual tax receipts of about $13.7 billion. Of course, as already noted, the effective tax rate for U.S. corporations is significantly lower.
Accelerated depreciation:
When companies acquire capital assets like buildings or factory equipment they can then deduct their depreciation cost from profits over a period of years deemed to represent those assets’ useful life. Accelerated depreciation allows a company to write off more of the cost faster, providing a larger deduction up front against taxable income.The 2017 Tax Cuts and Jobs Act allowed companies to deduct the full cost of such qualifying investments in the year they were made from 2018 through 2022. Bonus depreciation declines to 80% in 2023, 60% for 2024, 40% in 2025, and 20% in 2026 before elimination in 2027.The congressional Joint Committee on Taxation estimates accelerated depreciation of equipment will save companies more than $130 billion in federal taxes between 2020 and 2023.
Tax credits:
The U.S. tax code is riddled with a variety of tax breaks for businesses estimated to cost the Treasury more than $100 billion annually, though that’s a small proportion of total U.S. tax expenditures of about $1.6 trillion annually, including associated spending and foregone payroll and excise tax receipts.The list of industry-specific credits is long; it includes the $18.2 billion cost in fiscal 2022 of the “credit for increasing research activities,” $10.7 billion the same year in foregone revenue from the credit for low-income housing investments, $2.3 billion for the orphan drug research tax credit, and so on, right down to the distilled spirits credit for liquor wholesalers. The energy investment credit cost $6.6 billion in 2022, not to be confused with the $4.7 billion energy production tax credit or the $230 million cost of the marginal wells credit. The “tax credit for certain expenditures for maintaining railroad tracks” cost the U.S. federal government $110 million in fiscal 2022.All of this is on top of state and local tax incentives for businesses estimated to cost $95 billion annually. Federal government outlays on everything from direct payments to farm producers to the cost of operating the Export-Import Bank add up to tens of billions of dollars in direct government subsidies for business.
Deductions for employee stock options:
On their U.S. federal tax returns years later, the same corporations deduct the typically higher cost of exercised employee stock options from corporate taxable income based on the value of the options when exercised.The disparity between the estimated cost of employee stock options at the time of issue and their value for expensing purposes at exercise contributed to a large and recently increased book-tax gap between the net income large companies report to investors and the taxable income on their reports to the Internal Revenue Service (IRS). The expensing of employee stock options saved Fortune 500 companies $10.9 billion in taxes in 2018, including nearly $9 billion for the top 25 beneficiaries and $1.6 billion for Amazon.com, Inc. (AMZN) alone.Supporters of the current system note that while corporations deduct the value of employee stock options from taxable income taxed at a 21% maximum rate, the employees cashing them out typically pay taxes on their value at the top marginal personal income tax rate of 40.8%, leaving the Treasury ahead when whose receipts are considered.
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