As published on uk.news.yahoo.com, Monday 9 August, 2021.
A tax on the profits of the nation's wealthiest corporations was a key element of Massachusetts Sen. Elizabeth Warren's presidential campaign. She wants it to become reality in the Democrats' $3.5 trillion reconciliation package.
On Monday, Warren and Sen. Angus King, an independent from Maine who caucuses with the Democrats, announced in a press call they are planning to include a real corporate profits tax in the reconciliation bill, which would require companies to pay a 7% tax on earnings they report to investors above $100 million. This tax wouldn't apply to the earnings that companies report to the Internal Revenue Service, which are typically diminished to lower tax liability.
"I believe the revenues should come from billionaires and giant corporations that have evaded paying their fair share for far too long," Warren said during a press call.
"Our Real Corporate Profits Tax Act would create a fairer system and strengthen our economy by ensuring that highly profitable corporations stop getting away with cheating the system," she added.
Amazon reported $21.3 billion in profits last year, and Microsoft reported $61.2 billion.
King emphasized during the call that "$100 million is the starting point," meaning small businesses wouldn't be impacted.
"All we're saying is that large profitable corporations that are reporting these profits to their shareholders should pay some minimum amount," King said. "7% is what we're talking about. I see this as simple tax fairness."
The two senators estimated the tax would bring in nearly $700 billion in revenue over 10 years.
The Senate is expected to pass the bipartisan $1 trillion infrastructure package this week, but given that it leaves out many care-economy measures, such as universal pre-K and free community college, Senate Democrats, led by Bernie Sanders, laid out a blueprint for a separate $3.5 trillion reconciliation bill on Monday to encompass everything that got left out of the infrastructure plan, including a tax hike on the wealthiest Americans.
King noted during the press call that this corporate profits tax would help pay for universal pre-K and free community college, among other things.
Along with a profits tax, Warren proposed an ultramillionare tax in March on the top 0.05% of American households - another core component of her presidential campaign. Her argument for a wealth tax was bolstered by a ProPublica report in June that detailed how the wealthiest Americans, including Amazon's Jeff Bezos and Tesla's Elon Musk, managed to pay little to nothing in federal taxes.
Given that Republican lawmakers have been in strict opposition toward raising taxes on the wealthy, including the profits tax in the reconciliation bill is the best shot for Democrats since it can be passed without any Republican votes.
"This is about basic fairness," Warren said. "And if the big corporations are going to continue to exploit loopholes in the ways they have done, then we think there needs to be a backstop against that."