“The Securities and Exchange Commission requires publicly traded companies to disclose U.S. pretax income, federal and state income tax paid on that income, and any significant factors affecting tax expense. For this reason, we can generally describe the tax breaks used by these 55 companies to get their tax expense to zero.”
"The delivery giant FedEx zeroed out its federal income tax on $1.2 billion of U.S. pretax income in 2020 and received a rebate of $230 million.
The shoe manufacturer Nike didn’t pay a dime of federal income tax on almost $2.9 billion of U.S. pretax income last year, instead enjoying a $109 million tax rebate.
The cable TV provider Dish Network paid no federal income taxes on $2.5 billion of U.S. income in 2020.
The software company Salesforce avoided all federal income taxes on $2.6 billion of U.S. income."
This is a long-term pattern:
"26 Companies Pay Zero Federal Income Tax Over the Entire Trump Tax Era So Far"
You can’t really tax corporations - you either tax their customers (higher prices) or their shareholders (lower returns), or I suppose you destroy their market and the company entirely (ie min wage hikes for lots of restaurants). Claiming the middle class would be the typical recipient of the transfer of increased tax costs if higher taxes were imposed on corporations depends very much on the nature of the business and who pays their revenues currently. Cases where the companies are international and US competitiveness is impaired are even more complex.
Either way, we’re going to find out how much shows up in price inflation when Biden jacks the general corporate tax by an extra 1/3.
Why do you think nearly all the insurance companies are in Bermuda? The US is not a competitive tax jurisdiction. If you can’t move off shore in such a case, you could well be priced out of business due to the domestic tax burden making your ability to compete on pricing unattractive to your customer base. No customers, no business.
Where do you stand on subsidies for companies that are researching/developing/producing green energy? How about companies developing/producing zero emissions vehicles/machinery?
Let me turn around the corporate tax question. Why should companies pay taxes at all if you’re really just taxing their customers or their shareholders? Doesn’t that lead to regressive taxation when the customers are lower or middle class people you weren’t trying to tax, or tax much, under the rest of tax code?
Why not just get rid of corporate taxes entirely and raise personal taxes on the Evil Rich? Either the corporate taxes are a way for the government to hide how much they’re taking to avoid people noticing they’re bloated and inefficient, or it’s a way for the rich to unload some of their tax burden on the rest of the people ala raising tax revenues by selling lottery tickets or similar.
That arguments holds some water for cases where companies sell to customers. It would lead to some inflation, no question. Still, low- and middle-income families have less disposable income and consume proportionally less than higher income households. Hence, they’d effectively get taxed less than households consuming more. As such, indirect taxation of consumers would not be entirely regressive.
But the argument holds less water when you’re talking about taxed corporation passing the extra operational expense to shareholders by handing out lower returns. It’s a well-established fact that the level of investment in the stock market of low and middle income families is much less than that of higher income households. Even when lower income households have investments in the stock market, their balances are generally much lower than those of higher income households. 2020 Pew Research Study. Clearly taxing shareholders indirectly via taxing corporations would not be a regressive taxation scheme.
The arguments on whether high taxation of corporations impact businesses viability still seems totally legitimate to me, but the argument against taxing corporations because it’d be a regressive tax system seems fairly weak to me.
The market will value most established, mature companies on their dividend yield, which is a function of their after tax earnings. Higher taxes means lower after-tax earnings all else constant, so the company will have less cash to pay dividends and will likely cut their dividend rate (or slow their dividend growth plans) to compensate for the higher taxes. This will result in lower implied yields and hence the stock’s price will fall to bring those new lower yields in line with alternatives such as bonds, cash, growth stocks, foreign dividend stocks perhaps with lower tax rates, etc.
thus the tax hike can be seen in the market as a one-time hit to all shareholders of the company (most of whom are wealthy on average), whose price is revalued lower due to the higher government burden and earnings no longer being paid to shareholders. Future shareholders who buy after this hit get a fair price again. It’s more or less like a one-time wealth tax / confiscation.
High growth companies don’t usually have earnings for a long time, so the corporate tax policy doesn’t matter much to them in the short to medium term.
Because they aren’t required to immediately disperse all profits, and indefinite tax deferral for only the wealthy may not be ideal when the government is supposed to provide services like infrastructure and defense to its citizens?
Shareholders (currently) get favorable capital gains treatment which somewhat offsets the corporate tax. Most securities are held by the very wealthy, so it is clearly progressive. The customers are not taxed by corporate taxes because businesses must compete for supply and demand. This is evidenced by the TCJA – companies did NOT lower their prices to consumers when the corporate taxes were slashed.
The “corporate taxed are regressive, passes onto poor customers” seems like a silly contrivance. Where is your data showing they slashed consumer prices with TCJA rather than increased share buybacks and dividends?
Senator Joe Manchin just said Democrats do not have the votes to pass the American Jobs Plan in the US Senate. Manchin says he knows of 6 or 7 Democrats who agree hiking the corporate tax rate to 28% would put the country’s competitiveness at risk.
The 35% was high. 28 may still be slightly high. IMO, seems like they might end up at 25% or something. (Which would still be low or middle of other countries).
If we were starting from a point of zero taxes and wanted to tax only the wealthy, you are right that progressives should be more interested in a higher tax rate for the wealthy that disproportionately own more of the “corporations” rather than a higher corporate tax.
But since we aren’t starting at a zero point, if we were to switch to that model, it would have too many unintended consequences to make any sense - mostly because the middle class non-rich still hold at least some money in the market. The drop in the market that they see in their 401ks in one fell swoop will likely not be quickly offset by lower prices from the products these now untaxed corporations are selling. They wouldn’t get penalized nearly as much as the rich if that scenario were to play out, but they would still likely get penalized. The only people that wouldn’t get penalized would be folks that have $0.00 in the stock market.
While I concur with your overall conclusion, this paragraph is wrong. Consumption is not proportional and consumption taxes are regressive, because as a percentage of income and spending, they disproportionately affect those who spend more of their money on consumption.
Nothing unusual happened during that last year of Trumps term, hmm? I mean, it’s not like Biden’s covid relief bill killed over 15,000 Americans since being passed right? Try getting the causality right. Oh, I see the source is from HuffPo, who sadly hasn’t quite gone broke yet spouting unsupported partisan nonsense.
Back on topic, something you might approve of from NY. They’re set to pass the highest income taxes in the country for NYC. And this is to pay for rent forgiveness and illegal alien benefits… I’m not even making this up.
Legislators were briefed on a plan under which income-tax rates would rise to 9.65% from 8.82% for single filers reporting more than $1 million of income and joint filers reporting more than $2 million, the people said.
The plan would also add two new tax brackets. Income over $5 million would be taxed at 10.3% and income over $25 million would be taxed at 10.9%, the people said of the plan, and the new rates would expire in 2027.
The additional tax revenue would be used to increase school aid and create new funds for undocumented immigrants, small businesses and tenants who are behind on their rent, the people said.
“new rates would expire in 2027” - lol, maybe expire and be replaced with higher ones.
You can make the corporate tax rate whatever you want. If these ‘evil corporations’ are able to zero out their income, they still won’t pay any taxes.
The administration needs to put some actual effort into fixing the tax code if you think it is unfair, don’t just raise taxes on the ones that were already paying taxes under the old system.
You are applying labels. I am discussing the actual facts. It is completely unfair that people and corporations making billions of dollars pay lower tax rates and often actually lower taxes than most middle-class people, and even some poor people. They are not the ones who need lower taxes.
I am not disagreeing with you on the unfairness. I am disagreeing with how to fix the inequity. Most of the tax avoidance that makes the headlines is not about the tax rate, it is about the taxable income after deductions. You can raise the rate to 90%, but if they can still reduce their income to $0, they still pay $0 in taxes.
I would be in favor of keeping the tax rate as is, but implement some sort of minimum tax like the AMT on personal taxes. Could be as simple as 5% of gross income ( just throwing out a number ).