Study: Tax plan targets big firms

More than 70 companies, including Amazon.com, Bank of America, FedEx and DISH Network, likely would owe more in taxes if Congress passes a new corporate minimum levy, according to an analysis released by Sen. Elizabeth Warren.

The Massachusetts Democrat, who helped draft the proposal for a minimum tax on corporate profits in President Joe Biden’s economic agenda, released an analysis Thursday that found that at least 70 companies would pay more under the plan, based on their earnings in 2020.

But at least two of those companies have already disputed Warren’s findings.

Bank of America said its corporate tax rate for 2020 came to 21%, well over the 15% that would be required under the corporate minimum levy in the plan for companies that earn at least $1 billion in financial, or “book,” profits.

The proposal is meant to target profitable companies that are able to slash their tax bills because they qualify for deductions and credits that whittle down what they owe the Internal Revenue Service. Warren’s analysis concluded that Bank of America would have paid $1.1 billion more had the corporate tax been in effect in 2020.

In a statement, Bank of America said it paid $2.9 billion in corporate income taxes in 2020. Its corporate tax rate, the company said, reflects its environmental, social and corporate governance investments.

“Excluding these legal deductions our income tax rate for 2020 would have been 21%,” the company said.

The report also found that FedEx had a 7.2% effective tax rate and, if the new tax were

in place, would have paid $518 million more in taxes in 2020. FedEx said that the analysis was “premature” and that it paid all of the taxes it owed.

“Until there are clear details on the calculation of this proposed corporate minimum tax, it is premature to assume or estimate how the tax would apply to specific companies,” Chris Allen, a spokesman for FedEx, said in a statement.

Amazon would have had to pay an additional $836 million, based on its reported profits and tax payments, had the corporate minimum tax been in effect in 2020, Warren’s analysis concluded. DISH, which received a $223 million tax refund last year, would have ended up owing $386 million to U.S. and foreign governments on its $2.6 billion in global profits, according to the report.

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. The analysis considered “taxes paid” as a company’s current income tax expense.

“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.”

Neither DISH nor Amazon immediately responded to a request for comment on the report.

Warren’s report also found that the tax would require companies such as General Motors, Google, T-Mobile and Verizon to pay more.

The corporate minimum tax would raise about $318.9 billion over a decade, accounting for more than 20% of the $1.5 trillion in tax increases in the social-spending and tax bil.

The minimum tax is a roundabout way of raising corporate taxes without touching the 21% corporate tax rate, which Sen. Kyrsten Sinema, an Arizona Democrat whose vote is crucial in the evenly divided Senate, has said she opposes raising. Biden originally pledged to raise the corporate tax rate to 28%, but moderate Democrats have resisted that proposal.

The measure has been criticized by some economists, companies, and even House Ways and Means Chairman Richard Neal for adding complexity to the already dense tax code.

Financial companies, banks, telecommunications companies and utilities are likely to bear the brunt of the corporate minimum tax, according to Morgan Stanley research led by Todd Castagno. Collectively, companies in those industries will pay about 60% of the estimated book tax liability, according to Morgan Stanley.

Opponents of the 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.

“The potential politicization of the FASB will likely lead to lower-quality financial accounting standards and lower-quality financial accounting earnings,” according to a letter to members of Congress from more than 260 accounting academics.

The group also warned that, under the proposal, companies were likely to report smaller profits to their shareholders in order to lower their tax bills. They suggested that the idea of using book income as an alternative tax base is overly complex.

“It would be cleaner and simpler to just fix the tax code if there are perceived problems with the tax system,” they wrote.