Kamala Harris Wants a 28% Corporate Tax
It’s actually not that big of a deal since the tax code is filled with write-offs and deductions.
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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Comments
Income taxes are just another expense for a business.
Income taxes and flour for a baker are business expense.
If the cost of flour goes up, the baker needs to raise prices to make the business whole.
When a business’s income taxes go up, the business needs to raise prices
to remain whole.
When a business’s income taxes go up, the business needs to raise prices
to remain whole.
But . . . but . . . but . . . that’s price gouging!!!! We must pass federal legislation into law that allows the federal government to control the prices of goods!!! We cannot allow corporations and businesses to price gouge and rob the consumer!!!!!! (<–That's all sarcasm by the way but exactly what Harris has announced she wants to do.)
Tax them on the back end, regulate them on the front end, and they end up gutted in the middle. Hello, bankruptcy and food, pharmacy “deserts,” which will be the fault of the “greedy corporations.”
Harris announced that she wants to address price “gauging”.
How about tax gauging?
This is campaign fodder…not a real solution.
If this ever goes in, just invest in mega caps because they will use their big govt designed loopholes to pay no tax and crush their little competition to record profits.
Government greed need to be reigned in. Starve the state.
BwaaaHaaaa! Like that’s ever going to happen.
Trump wants to appoint Elon to head Dept of Government Efficiency
Komrade Kamala, father was marxist economics teacher. Capitalism is the enemy of “the people”.
From the article Above “I laughed. Do you know why?” “No corporation would ever pay the taxes.”
I am a CPA with a specialization in taxation along with reasonable understanding of micro economics (supply and demand curves etc).
The statement that corporations dont pay taxes since all those taxes are passed on to the consumer is a common misconception. When there is an increase in the corporate income taxes for a corporation, that increase is absorbed by a combination of the corporation, the shareholders and the consumers. What portion each group picks up of the increase is dependent on market forces which affect the supply and demand curves. In some cases, the consumer picks up most of the costs via higher sales price, in other cases, the corporation picks up most of the increase in income tax costs because the product demand is heavily influenced by small changes in pricing. In sum, who pays for the increased income tax is highly variable.
This is correct. But leftists never look more than one layer deep. If a Corp can raise prices to offset the additional tax expense, it will. If it can’t, the added expense leads to lower profits. This may lead to decreased dividends to shareholders, which are largely mutual funds held in 401(k) plans, or it may lead to less R &D, less, investment in equipment (stifling productivity growth which is the basis for increasing wages), etc. the corp may not be able to attract as much investment capital as well, due to lower ROI, leading to further reductions in hiring, R&D, investment, etc. leftists present corporate tax increases as some sort of free lunch for the government to then redistribute. But as always, TANSTAAFL.
Agreed, but the corporate profits fall, shareholders get skittish and sell shares, and the public rejects higher prices by buying less or no product.
All in all, a certain demise. The only variable is how long it takes…
Totally agree with all of this. But, I would argue that with commoditized products – like the kind that grocery stores carry – it’s the consumers that will eventually bear the brunt of the tax increase. Why? Because margins are already so low, there isn’t any real room for the corporation or the shareholder to absorb those increases. They either have to raise prices or go out of business.
To take that a step further, it’s the lower-income Americans – the ones who are most sensitive to commodity fluctuations – that will be hurt the most by raising the corporate tax rates. Unfortunately, this is a complicated subject that needs a well delivered, granular explanation and time to deliver it to the voters.
Laying off employees is one commonly used method to deal with cost increases that are unavoidable.
Agreed but I would add a couple of other stakeholders in the group of those sharing the burden in the long term: the workers and the community. Like it or not, business is conducted in a global market. If one raises the tax rates here in America, any US company will if possible over the long term, shift production or supply chain purchases elsewhere to reduce costs. This reduces the number of American workers and negatively impacts the local communities that are the recipient of spending by company employees. As noted elsewhere in the comments and by Robert Heinlein in the “Moon is a Harsh Mistress”, TANSTAAFL.
And this comment and its replies, we have the makings of a great Econ 101 course. Which, of course, the left wouldn’t even take, much less pass.
We could have Prager U make it into an animated one, which will then immediately be demonetized and shadow-banned by YouTube.
Well shifting to lower tax burden countries works until those countries start eating you alive. Oh- and then that cash is stuck there. So good luck building a factory elsewhere.
Intel-> Ireland.
Now Intel is all but shuttering ops there.
How original.
If the rates are raised, those deductions you list don’t increase. Corporations will pay more tax even after a diminution in sales due to higher compensatory pricing.
Often, the people who have to actually make the tax increase law (you know, Congress) also provide for “cost-of-living” adjustments for old exemptions that “haven’t kept pace with inflation.” So, yes, often, those loopholes do increase.
The subject is corporate taxes.
They just give them a different name for corporations.
I don’t want to fall back on write-offs, deductions, and skilled accountants so I can say that such tax increases aren’t disturbing. Raising taxes to these levels is criminal, and I can only hope that there will be serious push-back on this.
The government is already collecting far more tax revenue than it ACTUALLY needs. Any shortfall is due to uncontrolled spending that is outside of the government’s constitutional responsibilities.
It fills that “need” with more spending. Overspending, really.
A decade or so back, I read a quote by either John Stuart Mill or one of his contemporaries, musing that the effective tax rate of the people under the monarchies prevalent at the time was roughly 10%, and arguing that if the “liberal democracy” he proposed could not do its job at much less of a cost, it should be deemed a failed experiment. Unfortunately, I have been unable to find it since.
This is from Rabbi Shneur Zalman of Liadi, writing in Russia circa 1800: “Now ‘subjugation’ does not refer to the fact that we now have a king over us, and that he taxes us; for when the temple stood we had a Jewish king, and the tax was higher [than it is now], for it is well known that each person had to pay one tenth [of his income]!”
Evidently the tax burden in Czarist Russia in the late 18th century was significantly less than 10%, so that the prospect of a 10% income tax seemed like a significant increase in the material burden.
“…I can only hope that there will be serious push-back on this.”
There are far too many stupid people who will cheer this, saying “Yea, those evil greedy corporations got what they deserved.” They will particularly say this about those corporations which most effect their daily lives, like supermarkets, which have no choice due to low profit margins and must pass the full effect on the cost of doing business on to the consumers.
Any way you parse the words they always result in nuts.
gop will compromise with these lunatics again
flat tax !!
no exceptions
It’s the only truly fair thing.
Agreed a flat single rate of taxation would be best. Many, many folks will howl in opposition demanding that their own tax exemption or refundable credit simply must continue b/c …..reasons.
For one thing, it would make the Roth IRA just another broken government promise. Tax me twice, shame on me.
Not necessarily on the Roth. There’s still an income tax under a flat tax regime and I don’t see why we wouldn’t at least honor the promise of the Roth for the existing Roth a counts or even better retain them in parallel with normal IRA and 401K retirement accounts under the flat rate income tax regime. I don’t see how encouraging individuals to save for retirement is somehow incompatible with a flat income tax rate. After all there’s gonna be a flat exemption with it and gonna put passive income (dividend, rent, interest, cap gains) above a certain threshold at the same tax rate. Probably should scrap estate tax and apply any inheritance above $2 million as income as well. Lots of simplicity and far less opportunities for shenanigans in the tax code seems better.
Heck lets make everyone eligible for an HSA as well and end Obama care and its subsidies along with Medicaid and use those funds to subsidize HSA with catastrophic care insurance + annual dental exam/cleaning and an annual DR appointment +basic labs. Govt probably already spends enough on Ocare/Medicaid to fund that for every Citizen already. That would lower costs on private plans. Gotta do something to address the crying when all employer provided benefits are taxed as income…including heath insurance.
when pols call for a tax increase
WHAT THEY ARE REALLY SAYING IS:
you better contribute even more to my personal….ummmmm..campaign
Tax increases never raise as much revenue as their cheerleaders claim. One major reason is that the people being taxed change their behavior in response to the tax. So don’t go spending all that money just yet, Kamala.
It’s funny how the party that supposedly cares about people understand them so little.
ask NY about their “millionaire tax”
or CA on the mansions tax
those are 2 that I remember
I am sure their are more…
The Laffer curve is laughing at Harris.
Corporations don’t pay taxes, they collect them from customers
Tactically, they’re trying to create separation between Trump and the down-income voters that are more open to voting GOP this year because of economic uncertainty and pain. Campaign slogans about ‘soaking the rich corporations’ will always do reasonably well when there’s a populist undercurrent to an election, like this one has.
If this were the beginning of the campaign season, this kind of language would likely help Trump reconsolidate his support in the suburbs. But, considering we’re almost to Labor Day and voting will begin in another two-weeks in several key states, I worry that reasonable criticism of Harris’ economic ‘plans’ will filter through to voters in time. We’ll see.
harris , as does trump,,has a built in base
the communists do better as we know when they are allowed to lie and opposing thoughts are called
misinformation etc
man we are in trouble
Finally, a realist. Furthermore, perhaps 90% of the populace is so poorly educated (by design) in economics that explaining how people/corporations respond to incentives or disincentives and second order effects is met with glazed eyes. IMO Trump is a serious underdog.against Harris and billions worth of biased MSM coverage, which amounts to little more than campaign ads.
“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. ”
Yes, and that’s one way that politicians can collect $200k salaries for years and retire as multimillionaires with several million dollar homes.
They get to play “pick the winners and losers” by tinkering with those write offs and deductions. There’s a reason that DC is chock full of corporate lobbyists.
And that’s why the tax code is never, ever going to go away or be simplified. It simply gives them too much power and “income” potential and they’ll never give that up.
And, as an added bonus, it perpetually gives Democrats the whole “tax the rich” plank for their platform…every election cycle they can raise the corporate tax rate to get those “evil” corporations to “pay their fair share” but quietly include carveouts and exceptions and deductions that shield their friends (and those who are willing to pay the Danegold) from paying those rate. Then the next cycle, they do it all over again ad infinitum.
Then the next cycle, they do it all over again ad infinitum.
Yep. Until the nominal rate is 99% and the effective rate is close to 5% (for the favored). And then, you impose some other sort of tax on the “rich” corporations and the wealthy, and repeat the cycle,
Crone-harlot, Harris’s wretched and stupid economic conceits should be called “The Great Leap Backward,” thus giving due credit to their obvious Maoist/Stalinist tenor and ideological inspiration.
a fiscally responsible way to put money back in the pockets of working people
How on earth is it going to put money back in our pockets? It’s not going from the company to the consumer, it’s going to the gov’t – that giant maw of a black hole where fiscal restraint goes to die. The only pockets it will end up in are the ones in the pants of the lobbyists and their sponsors.
The average leftist voter is so incredibly ignorant, they can’t see that increased taxes lead to increased prices. They just insist companies are being “greedy”. The left needs to understand that corporations don’t exist just to provide tax revenue and jobs.
Correct. The general fiscal and economic illiteracy of the voting-age population is a large part of what enables the neo-communist, Dhimmi-crat apparatchiks to get away with their manifestly idiotic and destructive economic conceits.
It’s galling to concede it, but, crass Marxist-Leninist/Stalinist/Maoist demagoguery appeals to voters’ jealousy, resentment and ignorance regarding wealth creation and business ownership have proven to be a hugely effective electoral strategy, despite that poisoned well having had hugely destructive impacts upon the U.S. economy, tax code and individual/household financial security.
“It’s galling to concede it, but, crass Marxist-Leninist/Stalinist/Maoist demagoguery appeals to voters’ jealousy, resentment and ignorance”
Socialism is the utopia of the parasite.
It’s a lot less effort to be parasitic than productive.
Think stuff is expensive now? Wait until you’re paying an additional 28% to cover the corporate taxes. You didn’t think the companies were just going to eat that cost did you?
Le sigh. Corporations don’t pay taxes — they just collect them from their customers.
no- they steal them from their owners….
Both, to one degree or another. Depends on the business and profit margin for the entire sector.
Envy is a common ailment among those who are unsuccessful, unskilled and uneducated.
Having never been taught how to accomplish… well, ANYTHING, they are content to assume that luck or corruption are the only way to succeed.
Socialism/communism is an ideological match made in heaven for them.
There is but one source of Tax money, US. Taxing business is an indirect tax on us as it causes prices to rise. Business profits are usually taxed twice, first as a business ta and again as income when those dividends are passed on to stockholders.