Elizabeth Warren CAN'T STOP DOING POLICIES YOU GUYS!
Elizabeth Warren just can't stop releasing awesome policy ideas. It's like her years of teaching elementary special ed and then teaching law school just got her addicted to coming up with lesson plans -- for a better America. She's at it again with another policy proposal, this one perfectly timed for Oh Shit It's Tax Weekend: A plan to make sure the richest corporations actually pay some income tax, with no damn loopholes or deductions.
Warren calls this plan the "Real Corporate Profits Tax," and it targets companies that report huge profits but somehow manage to be ridiculously good at avoiding paying a cent in corporate income tax. Like for instance Amazon, which last year reported more than $10 billion in profits, but paid nothing in income tax. Or maybe Occidental Petroleum, which also managed to pay Not One Red Cent in income tax on corporate profits of $4.1 billion in profits.
The source of the problem is easy to spot, Warren explains:
Companies follow established financial accounting rules to calculate the value of the profits they report to shareholders and the public. But they follow a different set of tax accounting rules to calculate the "profits" they report to the IRS and pay corporate income taxes on.
And they pay plenty of money to lots of lobbyists and lots of clever lawyers and accountants to make sure there's a big difference between the profits they report to shareholders and the "profits" they report to the IRS.
Warren notes that the corporate freeloading problem has gotten ridiculously out of hand:
From 1988 to 2012, the effective tax rate for American corporations — the rate they actually pay relative to their profits — went down significantly. In a recent eight-year period, 25 big companies alone claimed $286 billion in tax breaks.
And yes, that's even before 2017's Big Fat Tax Cuts for Rich Corporate Fuckwads, which cut the largely hypothetical corporate tax rate even further while leaving the loopholes in place so effective corporate tax rates went down even more. The cuts funneled even more profits to corporations, which used it to boost their stock value, not to pay workers more or expand capacity, because "supply side" economics is bullshit.
Like Warren's proposed eat-the-rich wealth tax, this sucker is aimed only at the most bloated of the plutocrats:
This new tax only applies to companies that report more than $100 million in profits — about the 1200 most profitable firms in the country last year. That first $100 million is left alone, but for every dollar of profit above $100 million, the corporation will pay a 7% tax. Any company profitable enough to hit the Real Corporate Profits Tax will pay that tax in addition to whatever its liability might be under our current corporate tax rules.
That means Amazon would pay $698 million in taxes instead of paying zero. And Occidental Petroleum would pay $280 million in taxes instead of paying zero.
The new tax, according to the Warren campaign's indentured economists Emmanuel Saez and Gabriel Zucman of UC Berkeley, would generate a trillion dollars in revenue over its first 10 years, which means you JUST KNOW there's another Warren policy proposal in the works to make use of it, like how the eat-the-rich tax would pay for universal child care with lots left to spare for other nifty socialist plans.
But wait! Why not just raise corporate tax rates to where they were before the Big Fat Tax Cuts Etc.? That doesn't address the biggest sin of corporate tax avoidance, says Warren: The very richest corporations found ways to avoid paying any tax even before the Trump tax cuts, and they would again. Yes, let's close loopholes and maybe raise rates, but a small no-exceptions tax on the very richest greedhead corporations would ensure that even the ones with the craftiest lawyers won't be able to escape income tax altogether. As Warren says, there are
no loopholes, no exceptions, and nothing to manipulate. If a company tells its investors it made more than $100 million this year, it's going to have to pay some taxes.
We like! Sort of like a corporate version of the Alternative Minimum Tax, we suppose, but with the activation threshold set high enough that it's unlikely to squeeze the merely well-off instead of the truly obscenely rich.
As for the possibility that huge companies might be incentivized to tell investors "Sorry, we made less than $100 million" in order to avoid the tax, Warren says that's unlikely, because the additional tax wouldn't outweigh the benefits of strong profit reports:
Corporations will always want to report as low of a profit figure as possible to the IRS. But they want to report as high of a profit figure as possible to investors to drive up the company's stock price, which in turn drives up bonuses and other compensation for executives. Companies will be hesitant to under-report their profits to investors — which means they won't be able to game the tax system as much as they can now.
Sure, we'd assume some companies close to the $100 million line would do everything possible to make sure they don't cross it, for tax purposes, but that doesn't translate to, say Amazon.
Warren also notes that making big corporations pay their fair share -- okay, any share -- would help level the playing field for small business, a sector Republicans purport to love:
Studies show that the very largest companies pay a lower effective corporate tax rate than smaller companies. That's because the largest companies have more money to lobby for special tax loopholes and to hire hordes of lawyers and accountants to exploit every single loophole we already have. Big companies can also shift profits to offshore tax havens in a way small businesses can't.
In her big finish, Warren pays the mandatory lip service to the American Way, then turns right around and shames corporations that have forgotten the whole social compact thing:
American companies are among the most successful in the world. That success comes from our drive, our ingenuity, and our creativity. It also comes from a broad American infrastructure — roads and bridges, public safety, telecommunications, education, our legal system — that relies on government investment. Too many of our wealthiest companies have lost sight of this, and instead seek to cash in on all the benefits of America while skipping out on the bill. It's not right — and we cannot afford to let it continue.
Ahoy on deck, you! Thar blows the first sign of a coming Warren infrastructure plan! Now if she can just manage to explain the need to end corporate freeloading without uttering the dread words "You didn't build that," which we understand summons demons.
[Elizabeth Warren on Medium]
Yr Wonkette is supported by reader donations. Please send us money, and if we ever make $100 million in profits, we'll definitely buy you all an ice cream.
Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.