(Bloomberg) — A top Democrat pushing for a new minimum tax on companies invoked fresh data showing more than 100 profitable US corporations paying an average tax rate of just 1.1% as a showcase for the initiative.
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The Joint Committee on Taxation, the nonpartisan congressional tax scorekeeper, looked at the profits of large corporations in 2019 — before the pandemic. The analysis found 100 to 125 corporations that reported average earnings to shareholders of some $8.9 billion, and paid an average tax rate of 1.1% on those profits.
“Companies are paying rock-bottom rates while reporting record profits to their shareholders,” Senate Finance Committee Chairman Ron Wyden, who requested the JCT study, said in a statement. “When you talk to working Americans, nothing makes their blood boil like the most profitable mega-corporations paying little-to-no taxes. We’re going to put a stop to it with our 15% minimum tax.”
Democrats plan to vote as soon as this weekend on a tax-and-spending bill that includes a measure requiring corporations earning at least $1 billion to pay a minimum of 15% on the profits they record on their financial statements.
The measure has not yet garnered the support of all 50 Senate Democratic caucus members, which would be needed to pass in the evenly divided chamber. Senator Kyrsten Sinema, an Arizona Democrat, has yet to say she’ll vote for the bill, and is pushing for changes that would narrow the minimum corporate levy.
Changes — such as letting companies take more tax breaks for the amount they spend on equipment and buildings — could mean the tax raises far less than the estimated $313 billion in its current form.
Sinema’s colleagues, including Senator Joe Manchin, who helped craft the legislative package, say the corporate-tax provision would finally see companies that have long been able to use legal tax breaks to whittle down their bills to the Internal Revenue Service pay a fairer share.
Republicans have criticized the tax, and said that it could stifle innovation by undercutting incentives for US businesses to grow their domestic operations. GOP senators have also requested data on the proposal from the Joint Tax Committee, which found that nearly half of the new tax would be paid by manufacturers.
The Congressional Budget Office, a separate congressional scorekeeper, said Thursday that the corporate minimum tax would provide a disincentive for investment for business by limiting the value of certain tax breaks and it found that overall the bill has little-to-no effect on inflation in 2022 and 2023.
The bill, which could get an initial vote in the Senate as soon as Saturday, would spend about $370 billion on climate and energy provisions while extending Obamacare premium subsidies for three years, largely funded by the corporate minimum tax, increased IRS audits and narrowing a Tax break for private equity known as carried interest. It also would allow Medicare to negotiate drug prices for the first time and cap out of pocket costs for seniors.
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