Senator Elizabeth Warren is proposing another new tax that targets the richest entities in the US economy, this time Amazon and the nation’s other most profitable companies.
The Massachusetts Democrat wants to slap a 7 percent levy on profits beyond $100 million. Warren planned to announce the proposal in a Medium post Thursday morning as she continues to roll out major policy initiatives in her Democratic presidential campaign.
Warren is using a novel approach with her “real corporate profits tax.” She’s targeting what she said is a disparity between the profits that corporations report to their shareholders and what those same corporations tell the IRS.
“Because of relentless lobbying, our corporate income tax rules are filled with so many loopholes and exemptions and deductions that even companies that tell shareholders they have made more than a billion dollars in profits can end up paying no corporate income taxes,” Warren wrote in the post.
She described the idea as a “new kind of tax that big companies can’t get around.” The plan would affect about 1,200 corporations and raise approximately $1 trillion over 10 years, Warren said, citing an estimate from University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman.
Profits would be taxed regardless of whether they were earned in the US or overseas. The move would prevent companies from shifting profits to low-tax counties to avoid paying US taxes, Warren said.
She called out Amazon as a prime example of how the new tax would work. Despite nearly doubling its profit to $11.2 billion in 2018 compared with the previous year, the online retailing colossus did not pay any federal income tax. That’s thanks to tax credits and a provision in the tax code that allows companies to deduct the costs of stock-based compensation to employees.
Under Warren’s plan, Amazon would have to pay $777 million on that $11.2 billion profit, she estimated .
Warren has made income inequality a centerpiece of her presidential campaign: In January she proposed a tax on the “tippy top” of the wealthiest Americans. The plan would tax accumulated wealth of all assets over $50 million at 2 percent a year, and 3 percent for assets of more than $1 billion.
Warren has released policy proposals at a dizzying pace over the course of her campaign, and it is unclear how many of them could be passed into law in what could be a divided Congress after hte 2020 election.
An aide to Warren said Thursday that the corporate profits plan could be passed through the budget reconciliation process, which is a way of considering legislation related to taxes and spending that is not subject to the filibuster. Republicans used that strategy to pass their tax cuts legislation in 2017 by a simple majority in the Senate.
Warren also has called for eliminating the filibuster on legislation to prevent Republicans from blocking major Democratic initiatives.