Companies Could Still Pay $0 in Taxes Under Biden Plan

By Yuval Rosenberg

Some Companies Could Still Pay $0 in Taxes Under Biden Plan:
Report

When the White House announced President Joe Biden’s American
Jobs Plan, the $2.3 trillion infrastructure plan it paired it with
a tax plan it promised would “make sure corporations pay their fair
share in taxes.” Administration officials and the president himself
pointed to studies that showed how many Fortune 500 companies, the
largest in the country by revenue, paid nothing in federal income
taxes.

“A new, independent study put out last week found that at least
55 of our largest corporations use the various loopholes to pay
zero federal tax, income tax, in 2020,” Biden said last week in a
speech promoting his plan. “It’s just not fair. It’s not fair to
the rest of the American taxpayers. We’re going to try to put an
end to this.”

But The Washington Post’s Jeff Stein
reports that it’s not at all clear that Biden’s
tax proposals would eliminate the ability of large corporations to
pay nothing in federal income taxes.

“That is because Biden’s plan would still allow virtually all
corporations to use federal tax credits and deductions to reduce
their existing tax obligations — one key reason some large firms
pay nothing,” Stein writes. “Biden’s $2 trillion jobs and
infrastructure plan includes a significant expansion in these kinds
of credits, such as for clean energy investments, that corporations
use to zero out what they owe the Internal Revenue Service.
Additionally, the Biden administration dramatically narrowed its
proposal to ensure large firms pay at least some federal taxes,
muting its impact by having it only apply to a sliver of
firms.”

Steve Rosenthal, a tax expert at the Tax Policy Center, a
nonpartisan think tank, told the Post that Biden’s plan does not
address key elements of the tax code that enable corporations to
pay no federal income taxes, including the ability to deduct
capital expenses, executive compensation and losses from prior
years. And Biden’s proposal to ensure that large businesses can’t
use accounting maneuvers avoid paying taxes applies only to
companies with more than $2 billion in annual profit — a
much higher threshold than the $100 million Biden
had proposed during the presidential campaign. That threshold means
that the provision would not apply to 50 of the 55 corporations
that did not pay federal income taxes in 2020, Stein says.

White House officials did not deny that some corporations could
still pay no federal income taxes, Stein reports, but they said
that the number doing so would be significantly reduced under the
president’s plan and they emphasized that big businesses overall
would pay far more — some $2.5 trillion over 15 years — than under
current law.

Some tax experts also suggest that the examples of corporations
paying no federal taxes may matter mostly because they’re
emblematic of broader issues with the corporate tax code.

“One reason the public gets so mad about these stories [about
large firms paying nothing] is because they know it’s standing in
for an underlying reality that companies are getting away with a
lot,” Dan Shaviro, a tax expert at New York University, told the
Post. “If there was still the occasional company that did it, but
the public realized corporations were paying a lot more, those
stories would be less significant.”


Read the full story at The Washington
Post.

Chart of the Day: Corporate Tax Revenues as
a Share of GDP

Sen. Ron Wyden (D-OR), chair of the Senate Finance Committee,
issued a
series of charts illustrating how corporate tax
receipts as a share of GDP have fallen since the 2017 Republican
tax law cuts were enacted, the outlook under current law.

“Corporations have never contributed less to federal
revenues than they do now,” Wyden said in a
statement Thursday. “Our analysis of CBO data
shows corporate revenue is down nearly 40 percent from the 21st
century average since Republicans’ tax giveaway. I’m not talking
about comparing where we are today to where we were in the
1950s—I’m talking about comparing where we are today to where we
were just five years ago.”

Wyden said the data show that Republican opposition to
raising corporate taxes to pay for infrastructure investments “is
completely unreasonable.”

Why it matters: The fiscal significance of these
numbers is obvious, but there may be political implications as
well. The data from Wyden “vividly illustrates why the status quo
on corporate taxation is so hard to defend: It shows how little we
collect in corporate tax revenues as a percentage of the economy,
how bad the future outlook is and how miserably this compares to
other countries,” liberal Washington Post columnist Greg Sargent

writes. “If Democrats can press this case about
the indefensibility of the status quo, the Republican position
should get even harder to sustain.”

Republicans Struggle to Build an Infrastructure
Alternative

Republican lawmakers are unified in their opposition to
President Joe Biden’s $2.3 trillion infrastructure proposal,
rejecting both its massive size and expansive scope. But they’re
reportedly having a hard time crafting a counteroffer that would
satisfy members of their own party, an early indicator of just how
difficult it will be to reach a bipartisan agreement on an
infrastructure bill in the coming months.

Earlier this week, Sen. Shelley Moore Capito (R-WV) floated the
prospect of a slimmed-down infrastructure plan that could win
bipartisan backing, with a cost somewhere between $600 billion and
$800 billion. But some Republicans expressed concerns about that
level of spending, and by Thursday afternoon, Capito was backing
away from her proposal.

“It's too early to say right now,” Capito told reporters. “We
don't have a detailed figure attached to that, and it probably
won't be, I wouldn't think, an amount certain. More of a range of
where we think we could fall and begin to negotiate.”

Capito, the ranking member on the Environment and Public Works
Committee, said that her task now is to create a “conceptual
Republican bill” focused on the meat-and-potato infrastructure
issues, such as road construction and bridge repair, that
Republicans say they could support. But there is no consensus yet
among Republicans on what exactly that bill would do, how big it
might be or how it would be funded.

Biden eager to negotiate: The White House wants to get
started with negotiations, but the lack of a counteroffer from
Republicans means that substantial discussions can’t begin yet.

“What we're waiting for is a counterproposal from Republicans in
Congress,” Press Secretary Jen Psaki told reporters Friday. “And
they've indicated that they're working through that, so we look
forward to seriously considering any proposal that — any good-faith
engagement, I should say, that comes our way. But we're
waiting.”

Psaki added that Biden has made clear that he believes
corporations should pay for the cost of an infrastructure bill.
“Some in Congress think that it should be paid for by putting the
burden on the backs of Americans,” she said. “We're happy to have
that debate. But that's the fundamental disagreement. Those are the
two major options.”

Senate Minority Whip John Thune (R-SD) expressed optimism that
Republicans and Democrats could reach an agreement on a smaller
infrastructure package, though he noted that not all Republicans
were going to climb aboard. “If Democrats want to negotiate in good
faith on a truly infrastructure package, I don't know if it would
get Senator McConnell's vote, but I think there are a number of
Republican votes in support of a package to include the highway
bill, water, sewer, broadband, things like that," Thune said. “Much
smaller than what the Democrats have proposed, but more
focused.”

Smaller may be a problem, though. Pivotal centrist Sen. Joe
Manchin (D-WV) said Thursday that he doesn’t support the kind of
reduced package Republicans say they could back. “We're going to do
whatever it takes. If it takes $4 trillion, I'd do $4 trillion, but
we have to pay for it," Manchin told reporters.

Mulling their strategy: As we told you yesterday,
Democrats are mulling a strategy in which they work with
Republicans on a smaller bill in the name of bipartisanship while
keeping the option of passing a second, larger bill with a much
wider scope via reconciliation. Sen. Sheldon Whitehouse (D-RI)
spoke in favor of that approach this week. “The wise thing to do is
to work in two lanes. One is the reconciliation lane, which I don’t
think would be wise to forgo, and the second is the bipartisan
lane,” he
told Politico.

But Whitehouse also warned that the strategy could backfire by
giving Republicans a way to interfere with Democratic efforts. “If
[Republicans] know that we’ve committed to the bipartisan lane,
there’s a very strong incentive for them to make that a fake and to
use it simply to slow down,” Whitehouse said.

What’s next: Biden is set to have
additional meetings next week on the infrastructure
plan.

Number of the Day: 200 Million

The U.S. has surpassed 200 million Covid-19 vaccine doses
administered, the White House said Friday.

The chart below from the CDC’s Covid
data tracker shows more than 202 million vaccine doses
administered as of Friday. About 38% of the total population has
now received at least one dose, and 24% are fully vaccinated. The
numbers are dramatically higher for older Americans, with 80%
having received at least one dose and 31% now fully vaccinated.

It took 89 days to hit the 100 million dose mark,
Bloomberg
said Friday, and the U.S. recorded its 200
millionth dose 36 days later.

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