Tax would hit giant corporations

Amazon, others would pay 15% minimum on their ‘book income.’

At least 70 of the largest U.S. companies would pay more in taxes under a new minimum tax that Democrats are proposing as a way to pay for the spending bill moving through Congress, according to an analysis being released Thursday by Sen. Elizabeth Warren, D-Mass.

The report offers a first look at which companies could face higher tax bills under the proposal, which calls for enacting a 15% minimum tax on companies that report more than $1 billion in profit to shareholders, even if they have zero federal tax liability. The plan is included as a source of revenue in a $1.85 trillion social policy and climate bill that President Joe Biden is trying to push through Congress.

The new tax would apply to the so-called book income that companies report to their shareholders but not to the IRS. Many profitable companies are able to reduce or eliminate their tax liability through the use of tax credits, deductions and previous losses that can carry over.

The book tax aims to raise money from companies without increasing the 21% corporate tax rate. Biden originally pledged to raise the corporate tax rate to 28%, but moderate Democrats have resisted that proposal.

The report by Warren found the tax would require companies such as Amazon, Facebook, FedEx, General Motors, Google, T-Mobile and Verizon to pay more to the U.S. government. A recent report by the Joint Committee on Taxation determined that the proposal would generate $319 billion over 10 years.

“Giant corporations have figured out how to game the system so that the costs of running this country are borne by hardworking families while these big corporations scoop up all of the profits and pay little or nothing in taxes,” Warren said. “It’s time to put a stop to that.”

Warren’s office used data compiled by the nonpartisan Institute on Taxation and Economic Policy on publicly traded companies in the Fortune 500 and S&P 500.

According to Warren’s report, Amazon was able to reduce its tax rate to 11.5% rather than 21% in 2020. The company would have paid $836 million more in federal and foreign income taxes had the minimum tax been in place, according to the analysis. Amazon declined to comment.

Opponents of the new tax have expressed concerns that it would give more control over the U.S. tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.