Companies reporting more than $ 1 billion in profits would be required to pay at least 15% tax under a proposal that could end in the Build Back Better Act, the cornerstone of President Joe Biden’s agenda.
Proposal supporters Sen. Elizabeth Warren (D-MA), Sen. Ron Wyden (D-OR) and Sen. Angus King (I-ME) outlined some of the details on Tuesday as Democrats argued over payment terms Build Back Better Act, which would expand the social safety net and programs to combat climate change.
Studios and media companies as well as lobbyists from all industries have spoken out against Biden’s proposal to increase the corporate tax rate from the current 21%. But this tax hike plan appears to be dead as Senator Kyrsten Sinema (D-AZ) is against hikes in corporate tax and high earning rates.
However, on Tuesday she expressed her support for the three senators’ proposal, saying it “is a sensible move to ensure that highly profitable companies – who can sometimes avoid the current corporate tax rate – pay an adequate minimum corporate tax on their profits, just like.” normal Arizonans and small businesses in Arizona do. “
In arguing for a corporate minimum tax, the senators highlighted Amazon, noting that it paid 4.3% of federal tax on its $ 45 billion in corporate profits over the past three years. “In fact, Amazon paid no federal income tax at all in 2018,” the senators said in their draft.
It’s not entirely clear how a 15% minimum tax would affect large media companies as more details of the proposal need to be worked out, including the value of things like deductions and write-offs.
In the past fiscal year, Comcast, Netflix, ViacomCBS, Discovery and Fox Corp. Net profits of over $ 1 billion. The Walt Disney Company reported a loss due to theme park closures due to Covid-19.
The content and media companies also have different effective tax rates that take into account deductions and state and local taxes. For example, Comcast had an effective rate of 23.9%, while Netflix was 13.69% according to their financial reports.
The senators said their proposal would apply to about 200 companies and generate hundreds of billions in revenue over 10 years. You want to keep tax credits for research and development, for example, and taxes paid abroad. The proposal would also allow businesses to carry losses forward and claim a minimum tax credit on top of regular tax in future years.
Studios and media outlets were among the companies that campaigned heavily for lowering the corporate tax rate in the 2017 tax reform plan, a key part of President Donald Trump’s agenda. It cut the company’s stake from 35% to 21%, a huge drop that should spur economic growth. But Democrats have argued that the projected boom in corporate investment in the tax reform plan never materialized and the tax savings go to shareholders.
The Build Back Better Act is a $ 3.5 trillion proposal that would have included two years of free community college, childcare and universal pre-kindergarten, as well as an expansion of Medicare to include dental, hearing and visual aids. It also includes a number of initiatives to combat climate change, including a provision that would pay utilities who switch to clean energy. But legislation is being scaled back significantly due to opposition from Sinema and Senator Joe Manchin (D-WV) as the Democrats run out of votes in the 50-50 Senate. The White House and Democrats want to reach an agreement on the law by the end of the week.
Jill Goldsmith contributed to this story.