The Biden government has proposed a comprehensive program to help combat climate change, create an economy of mutual prosperity and reduce the many inequalities in our society. It’s about things that are important to the average American – childcare, access to community college, universal broadband, expanded health care for the elderly, etc. It’s about changing the politics of which the United States is a part only seven nations in the world that does not offer paid parental leave. The central question is: “How do we pay for everything?”
Elected officials have considered a flat corporate tax rate hike to boost revenue for the expanded social safety net included in the plan for Build Back Better. Instead of passing a unilateral tax hike that would disproportionately harm small businesses and sectors that employ people in marginalized communities, Congress should include a minimum corporate tax in the reconciliation package. This approach would increase revenue by ensuring huge companies pay their fair share without overwhelming the struggling small businesses and retailers.
Large US corporations can frequently leverage loopholes, deductions, and exemptions in the tax code to pay little to no tax, in part because they can afford the large number of lawyers and accountants required to effectively use each loophole and reduce their tax liability . This is something that small businesses become because of their small profit margins, and other sectors like retail cannot do this as they are not eligible for many deductions. This leads many companies to overpay, especially those that also have to pay tariffs on goods, while large corporations pay as little as possible – and sometimes nothing at all. A rise in corporate tax would only worsen this inequality, while a minimum tax would ensure that all businesses pay their fair share.
While, for example, an increase in the corporate tax rate has a negative effect domestic retailers, These companies would not be as badly affected by a minimum tax as they already pay much more than 15 percent. Meanwhile, retailers provide jobs for millions of workers as well as members of underrepresented communities. Retail jobs are often filled by non-white workers, women, and young people starting their first job, in addition to those who only have high school degrees. These are the Americans who have also been hardest hit by COVID and are exactly the people the Democrats stood up for. Unfortunately, if the corporate tax rate is increased, these workers are at risk of losing their jobs. For this reason, a minimum tax rate would be a far more effective and fairer approach.
Fortunately, a minimum tax would ensure that companies reporting over $ 1 billion in profit to shareholders would have at least one fifteen% Tax rate on these profits is taken into account as part of the Build Back Better plan. This policy would prevent large corporations from getting away with paying zero (or less) taxes while simultaneously paying them $ 227 billion Income that can be invested in childcare, clean energy and infrastructure improvements. American companies, in turn, benefit from this and can increase their competitiveness.
This would also bring the United States in line with much of the international community, particularly the Group of 20 who officially advocating a new global minimum tax of 15 percent to reverse decades of decline in tax rates for businesses around the world.
A corporate minimum tax would be a step in the right direction to level the playing field, especially for industries such as retail, which have been in the past pay a lot more Taxes than other types of businesses and small businesses that operate on tight margins. Hopefully, as the Democrats continue their work on completing the Build Back Better plan, they will keep an eye on the workers who rely on these jobs to support their families by supporting a minimum corporate tax as opposed to a corporate tax hike.
Paris Glendening was Governor of Maryland from 1995 to 2003.