Nov 22, 2022
Tax justice campaigners are urging Democratic lawmakers to resist corporate America's push for a series of major giveaways during the lame-duck session, arguing Congress should instead be raising taxes on large businesses as they continue to drive up prices for consumers while raking in record profits.
"In 2021, corporations recorded annual profits of $2.8 trillion, up 25% from the year before. And, in 2022, they're enjoying the highest profit margin in over 70 years," the Americans for Tax Fairness Action Fund notes in a new petition. "Now, even as major, profitable corporations are price gouging the American people, they are demanding that Congress give them a new round of tax breaks before year's end that could cost up to $600 billion over ten years."
"Instead of doubling down on the failed Trump-GOP tax scam, Congress should raise the corporate income tax rate from 21% to at least 28%."
The tax breaks in question include a deduction that previously allowed corporations to slash their taxable income by writing off their research and development expenses all at once. A provision in the 2017 Trump-GOP tax law requires companies to spread research and development costs over five years, a change that large corporations such as Boeing, Lockheed Martin, and Ford are trying to reverse before the end of 2022.
According to Americans for Tax Fairness, restoring the deduction to its previous form--something that Republicans and many Democrats support--could cost the federal government $155 billion in revenue over 10 years.
The group also warns that corporations have set their sights on "expanding the net interest deduction tax break to allow corporations to deduct a bigger share of their interest costs from borrowing money by changing how the deduction is calculated" and "extending 100% bonus depreciation, which would allow corporations to write off immediately the full cost of assets that hold their value a long time."
Those two changes combined would cost the U.S. government $450 billion over a decade, Americans for Tax Fairness estimates.
A recent analysis by the Institute on Taxation and Economic Policy found that 23 major corporations--including Google, Amazon, and JPMorgan Chase--received roughly $50 billion in tax breaks from the "bonus depreciation" provision of the Trump-GOP tax law. The tax break is set to expire in 2022, but major corporate lobbying organizations such as the National Association of Manufacturers are pressuring Congress to extend it.
"Instead of doubling down on the failed Trump-GOP tax scam, Congress should raise the corporate income tax rate from 21% to at least 28% (still far lower than the 35% corporate tax rate from just 5 years ago)," said Americans for Tax Fairness. "This would raise nearly $900 billion over 10 years, coming mostly out of the pockets of wealthy shareholders."
Additionally, Americans for Tax Fairness said Congress should "close offshore corporate tax loopholes" and strengthen the recently approved corporate minimum tax, moves that would raise revenue that "could be used to improve the lives of working families: making healthcare, childcare and housing more affordable; expanding the Child Tax Credit to lift millions of children out of poverty; shoring up Medicare and Social Security; and more."
\u201cHow much corporations have avoided paying in taxes from 1 tax loophole:\nVerizon: $5 billion\nGoogle: $4.7 billion\nBank of America: $1.2 billion\nMarathon Petroleum: $1.1 billion\nAmazon: $1 billion\n\nRepublicans want to give them even MORE tax cuts in the year end bill.\u201d— Americans For Tax Fairness (@Americans For Tax Fairness) 1668896908
In recent weeks, some Democratic lawmakers have indicated that they would be willing to approve corporate tax cuts--specifically the research and development deduction--in exchange for a revival of the expanded Child Tax Credit, which dramatically cut child poverty before expiring at the end of 2021 due to opposition from Republicans and Manchin.
"There's going to be a clear debate about tax choices, and this whole debate about Child Tax Credit is front and center on that discussion," Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee, told reporters earlier this month.
As Bloombergreported last week, Republicans "want tax breaks for private equity, manufacturers and businesses" while Democrats "want to expand the child tax credit, using their final weeks controlling both congressional chambers to reinstitute a policy they see as critical to reducing child poverty."
"Democrats could secure a more modest child tax credit in return for extending the soon-to-expire business tax breaks that Republicans support--affecting research and development costs, investment deductions, and debt write-offs," the outlet noted. "The resulting package would benefit a swath of stakeholders ranging from private equity firms and pharmaceutical companies to the parents of young children."
On November 10, a group of House Democrats led by Reps. Pramila Jayapal (D-Wash.) and Jimmy Gomez (D-Calif.) demanded that any corporate tax breaks included in year-end legislation "be paired with provisions that will provide crucial support to families," including an extension of the boosted Child Tax Credit.
"We should not extend corporate tax breaks unless and until we deliver additional relief for families," the lawmakers wrote.
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