Wall Street Journal:
Biden Tax Plan Targets Profitable Companies That Pay Almost Nothing.
- The Democrat’s proposal would require Amazon, others to pay at least 15% of reported profits
- Profitable companies like Amazon.com Inc. could no longer use legal breaks to drive their U.S. tax bills almost to zero under Joe Biden’s proposal to increase and overhaul corporate taxes.
On top of higher tax rates, Mr. Biden would impose a 15% minimum tax on profits reported to investors, a move that would limit companies’ use of popular tax breaks. That minimum tax would raise $400 billion over a decade by the campaign’s estimate, and $166 billion according to the Tax Policy Center.
“Vice President Biden has been clear that it’s absolutely unacceptable for some of the biggest companies in America, like Amazon, to pay next to nothing in taxes,” Michael Gwin, a campaign spokesman, said. He said the additional revenue would go toward infrastructure, clean energy and other priorities.
It is one way Mr. Biden hopes to reverse President Trump’s 2017 tax cuts and extract money from corporations if he wins the presidency and Democrats take full control of Congress. The argument for higher corporate taxes resonates with many voters.
How can profitable companies manage to pay little or no tax? They often do so because of the discrepancies between two sets of books. One, reported to investors publicly, follows generally accepted accounting principles for recognizing income and expenses. The other, reported to the Internal Revenue Service privately, follows the tax code.
Critics say Mr. Biden’s proposal could be counterproductive, partly because it would discourage companies from using tax breaks Congress created to promote investment in some of the very things the former vice president is trying to promote, such as renewable energy, low-income housing and manufacturing.