The reality is that many large corporations pay nothing – zero – in federal corporate taxes. A study by the Institute for Taxes and Economic Policy found that this statement applied to 55 of the largest companies in the United States in the past fiscal year. If those 55 companies had paid 21% of their profits, they would have paid $ 8.5 billion. Instead, they received a combined tax break of $ 3.5 billion.
But Biden doesn’t just want to bring the corporate tax rate a little closer to what it was five years ago. He also wants companies with incomes in excess of $ 2 billion and what the finance department tactfully calls “large discrepancies between income reported to shareholders and income reported to the IRS. “
The sum total of Biden’s proposals, Treasury Secretary Janet Yellen wrote in a Wall Street Journal, is:Enter the US in a new, smarter form of competition. America will compete for our ability to produce a talented workforce, cutting-edge research and state-of-the-art infrastructure – not whether we can have lower tax rates than Bermuda or Switzerland. “Biden’s plan, she writes,” not only ends America’s participation in the race to the bottom, but also gives the world an incentive to give up the race. “
It may come as no surprise at this point that a major obstacle to Biden’s plan is likely Conservative Democratic Senator Joe Manchin, who has stated that he does not want the corporate tax rate to rise above 25%. Biden said he is “willing to negotiate the percentage, and if Manchin is willing to vote yes to closing any gaps, the topline percentage is not the whole ball game.
While Republicans cut taxes on businesses and the rich for their own sake, Biden plans to invest the money in infrastructure. There is majority public support for both infrastructure investments – including spending on elderly care – and tax increases for businesses and high net worth individuals. And the United States urgently needs to upgrade its decaying infrastructure. It’s time.