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Ethics & Religion
Column #2,078
June 9, 2021
55 Corporations Pay No Tax
By Mike McManus

55 major U.S. companies, such as Nike, FedEx, Salesforce and Archer Daniels Midland, paid $0 in federal taxes on their 2020 profits. According to the Institute on Taxation and Economic Policy (ITEP) no fewer than 55 publicly traded firms avoided federal income taxes last year, despite reporting nearly $40.5 billion in combined pre-tax profits.

Of those 55 companies, 26 were identified by ITEP as having paid no federal income taxes for three consecutive years on a combined $77 billion in earnings over three years.

President Biden asserted, "You have 51 or 52 corporations of the Fortune 500 (that) haven't paid a single penny in taxes in three years." Biden told reporters, "Come on. Let's get real." As he said in the Oval Office, "It's just not fair. It's not fair to the rest of the American taxpayers."

Under Biden's plan, corporations would pay at least $2 trillion more in taxes than they do now. The plan also includes aggressive measures to prevent multinational corporations from reducing their U.S. tax base by shifting profits overseas.

France, Germany and Italy said that a new U.S. proposal for global minimum corporate tax rate of 15% was a good basis for sealing an international deal by July.

The U.S. Treasury Department offered to accept a minimum rate of at least 15%, significantly below its proposed 21% minimum on U.S. multinational firms.

It made the proposal at the Paris-based Organization for Economic Cooperation and Development (OECD) where nearly 140 countries aim to reach broad agreement this summer to rework rules for taxing multinational groups and big technology companies such as Google and Facebook Inc.

"Treasury proposed to the steering group that the global minimum tax rate should be at least 15%," the department said in a statement. "Treasury underscored that 15% is a floor and that discussions should continue to be ambitious and push the rate higher."

U.S. Treasury Secretary Janet Yellen first proposed a 21% U.S. corporate minimum tax in April as part of President Joe Biden's $2.2 trillion infrastructure spending proposal, which would be financed largely by increasing the U.S. corporate tax rate from 21% to 28%.


The Trump Administration and congressional Republicans in 2017 cut the corporate tax rate to 21% from 35%. At the same time, the Treasury launched a U.S. minimum tax, of 10.5%, known as the Global Intangible Law-Taxed Income Tax (GILTI) to capture revenue shifted by companies to tax-haven countries.

The Biden Administration proposed 21% GILTI rate was widely viewed as a starting point for renewed OECD talks on a global minimum tax.

While France and Germany backed the 21%, other countries have pushed for a lower rate, as previous OECD discussions on the subject had centered around 12.5%, the same rate charged by Ireland.

"The last proposal made by the United States could be a good compromise," French Finance Minister Bruno Le Maire said as he arrived for talks with Euro Zone counterparts in Lisbon.

His German counterpart, Olaf Scholz, welcomed the new U.S. proposal as "big progress" and EU Economic Commissioner Paolo Gentiloni said it was a step forward to a deal, as did Italian Economy Minister Daniele Franco.

All hoped that talks would be wrapped up as planned by a July meeting of G20 finance ministers, amid suggestions from the OECD that it could take until October to finalize a deal.

Two Euro officials at the meeting in Lisbon said that the U.S. offer would find wide backing in the broader European Union. "That 15% will be acceptable for all EU member states, including Luxembourg and Ireland," one of the officials said.

Britain, which is due to host an online meeting of finance ministers next week, remains concerned that the latest U.S. proposals do not address the challenge of ensuring large multinationals, especially tech companies, pay more tax in countries where they generate revenue.

The U.S. Treasury official said the Biden Administration will continue to advocate for the highest rate possible above 15%, such as the 21% proposed U.S. minimum tax.

However, Marial Corwin, head of KPMC's Washington National Tax practice, and a former Treasury official, asserted "The 15% rate is certainly more realistic given where other countries are."

"Importantly, this is signaling that the U.S. is willing to accept a global minimum tax that is well below the rate they are proposing for GILTI," she added. "I suspect it was important for reaching agreement at the OECD that the U.S. is willing to agree to something well below 21%."

No corporation should get away with paying no taxes. That's the new consensus.

It's simply not fair.
_________________________

Copyright (c)2021 Michael J. McManus, President of Marriage Savers and a syndicated columnist. To read past columns, go to www.ethicsandreligion.com. Hit Search for any topic.

 

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