August 11, 2021
WASHINGTON, D.C. — U.S. Senators Angus King (I-Maine) and Elizabeth Warren (D-Mass.), and U.S. Representative Don Beyer (D-Va.) introduced bicameral legislation seeking to ensure America’s largest corporations pay their fair share in taxes, with dozens of big name, multi-million dollar corporations having paid zero federal taxes in recent years. The Real Corporate Profits Tax Act of 2021 would create a fairer tax system and stronger economy by establishing a new tax on book income that would, in effect, create a corporate minimum tax on these successful corporations. The lawmakers are pushing to include the bill as a revenue source in the upcoming reconciliation package.
“In 1965, corporations paid roughly 4% of the nation’s GDP in state and federal income tax. Today, that rate is only 1%,” said Senator King. “This massive decline has contributed to the nation’s rising debt and threatened basic public sector services Americans rely upon. Corporations should not be able to access America’s wealthy consumer market, talented labor pool, and other benefits without paying to support the conditions that make the U.S. the world’s premier place to do business – but many profitable, U.S.-based corporations pay zero federal corporate income tax. Our proposal is about simple fiscal sense and common fairness, creating a reasonable floor on tax payments to make sure profitable corporations with profits over $100 million pay their fair share.”
Currently, the U.S. tax code allows large corporations to pay little or no tax because they are able to exploit a host of loopholes, deductions, and exemptions to drive down their tax liability. While these companies report billions in “book income” on their financial statements, they often pay no income tax to the IRS and leave hardworking families holding the bag.
The Real Corporate Profits Tax Act would require companies to pay just $0.07 in taxes on every dollar above $100 million in book income that is reported to shareholders, and generate nearly $700 billion in revenue over ten years. The tax would be applied in addition to what companies owe under the regular corporate tax rules, but companies that already pay corporate income tax will be allowed to credit a portion of that tax against Real Corporate Profits Tax liability. Establishing the Real Corporate Profits Tax would not only put an end to profitable corporations getting away with paying zero (or less) in taxes, but it would also generate the revenue needed to invest in child care, education, infrastructure, and tackle the climate crisis– investments that make American companies more competitive and our economy more resilient.
In the American Jobs Plan, President Biden proposed a minimum tax on the income large corporations use to report their profits to investors.
Specifically, The Real Corporate Profits Tax Act would:
· Apply to roughly 1,300 public companies and all private companies that report over $100 million in book income to their shareholders
· Create a 7% surtax on every dollar of book income above $100 million
· Allow companies to claim a credit of one-third of federal income taxes paid
· Raise nearly $700 billion in revenue over 10 years to support critical investments in our workers, families, and communities.
The Real Corporate Profits Tax Act is cosponsored by Senators Jeff Merkley (D-Ore.), Ed Markey (D-Mass), and Sheldon Whitehouse (D-R.I.).
The Real Corporate Profits Tax Act is endorsed by Action Center on Race and the Economy, Data for Progress, Indivisible, Progressive Change Campaign Committee, Public Citizen, SEIU, Take on Wall Street.