Sen. Bernie Sanders (I-Vermont) is taking aim at the corporate tax code with a wide-ranging bill that would close loopholes that have allowed corporations to pay zero dollars in corporate taxes in recent years due to tax policies that he says pave the way for “legalized tax dodging.”
The Corporate Tax Dodging Prevention Act, introduced on Wednesday, would reform the corporate tax code by taking aim at tax avoidance strategies like offshore tax havens, which allow corporations to pay a far lower tax rate on income in offshore bank accounts, and manipulation of the low statutory corporate tax rate. Companion legislation was introduced in the House by Rep. Jan Schakowsky (D-Illinois).
The bill would ensure that companies are paying the same corporate tax rate on offshore income as income in domestic accounts, rather than allowing companies to pay a far lower tax rate on offshore accounts. It would also repeal a Donald Trump-era tax break that effectively incentivizes companies to move assets operations abroad, among other provisions aimed at preventing corporations from being able to shield income from taxes in offshore accounts.
Additionally, the bill would restore the pre-Trump corporate tax rate of 35 percent. The GOP’s 2017 Tax Cuts and Jobs Act, which has caused an explosion of wealth for the rich and corporations, slashed the corporate tax rate to 21 percent.
Over the next 10 years, the bill would allow the federal government to collect an additional $2.3 trillion in tax revenue, according to analyses by the Joint Committee on Taxation.
“At a time of massive wealth and income inequality and soaring corporate profits, it is an outrage that many large, profitable corporations continue to pay little to nothing in federal income taxes,” Sanders said in a statement. “As working people struggle to pay rent and put food on the table, we have a corrupt and rigged tax code that is designed to benefit the wealthy and the powerful at the expense of working families.”
Due to corporate-friendly tax policies, especially the GOP tax bill, many corporations have had a federal income tax bill of zero dollars in recent years. The offshore tax haven loopholes and provisions are crucial for corporations to avoid paying taxes altogether, or to push their tax rates to extremely low levels.
According to a Government Accountability Office study released last year, 34 percent of large corporations that made profits the year after the tax bill was passed paid nothing in federal income taxes. The Institute on Taxation and Economic Policy (ITEP) has similarly found in subsequent years that over 100 large companies like Amazon, Nike, T-Mobile, Netflix, General Motors, and others have paid extremely low or zero federal taxes in at least one year since the bill was passed; in February, ITEP found that 23 corporations of 342 companies the group studied paid zero federal taxes over the course of 2018 to 2022, with many paying a negative effective tax rate.
At the same time, corporations have been making record profits, pocketing trillions of dollars in recent years, due in part to soaring inflation and corporate greed.
“American workers should not be paying more in federal income taxes, in a given year, than profitable companies like Target, Amazon and T-Mobile,” Sanders said.
The U.S. is unique in its ultra-low corporate tax revenue, as a press release on the bill points out. While corporate taxes accounted for 30 percent of total federal revenue in the mid-20th century, that proportion has since fallen to 9 percent; the proportion of the U.S. economy represented by corporate tax revenues, meanwhile, is half the average rate of other Organisation for Economic Co-operation and Development countries (OECD) countries.
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Sharon Zhang is a news writer at Truthout covering politics, climate and labor. Before coming to Truthout, Sharon had written stories for Pacific Standard, The New Republic, and more. She has a master’s degree in environmental studies. She can be found on Twitter: @zhang_sharon.
Sanders Introduces Bill to Combat “Legalized Tax Dodging” for Corporations
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11.04.2024
Sen. Bernie Sanders (I-Vermont) is taking aim at the corporate tax code with a wide-ranging bill that would close loopholes that have allowed corporations to pay zero dollars in corporate taxes in recent years due to tax policies that he says pave the way for “legalized tax dodging.”
The Corporate Tax Dodging Prevention Act, introduced on Wednesday, would reform the corporate tax code by taking aim at tax avoidance strategies like offshore tax havens, which allow corporations to pay a far lower tax rate on income in offshore bank accounts, and manipulation of the low statutory corporate tax rate. Companion legislation was introduced in the House by Rep. Jan Schakowsky (D-Illinois).
The bill would ensure that companies are paying the same corporate tax rate on offshore income as income in domestic accounts, rather than allowing companies to pay a far lower tax rate on offshore accounts. It would also repeal a Donald Trump-era tax break that effectively incentivizes companies to move assets operations abroad, among other provisions aimed at preventing corporations from being able to shield income from taxes in offshore accounts.
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