US president Joe Biden vowed to make companies like Amazon pay their fair share in taxes to fund his ambitious $2 trillion infrastructure plan.
He said it was not about “retribution” against the wealthy and successful, but the fact that Amazon pays zero in federal taxes is “just wrong.”
Biden has unveiled the far-reaching plan to shore up the nation’s highways, bridges and ports, as well as fund telecommunications upgrades plus research and development to boost competitiveness, especially compared to China.
A key source of the financing would come from increasing the corporate tax rate from 21 percent to 28 percent, and cracking down on the use of tax havens to avoid paying US taxes.
The package already is drawing condemnation from corporations that balk at reversing the tax cuts signed in late 2017 by then-president Donald Trump.
That measure slashed the corporate rate from 35 percent, although with various deductions and loopholes, the average rate companies actually pay was, and remains, much lower .
Companies in the US pay an average tax rate of just eight per cent compared with 16 percent prior to 2017, according to a recent analysis by the Joint Committee on Taxation.
In his speech in Pittsburgh, Biden expressed outrage over the imbalance between taxes paid by the wealthiest corporations and the burden for middle-class workers.
He cited a 2019 study showing 91 Fortune 500 companies, “the biggest companies in the world, including Amazon … pay not a single, solitary penny of federal income tax.
“That is just wrong.”
“A fireman and a teacher paying 22 percent and Amazon and 90 other major corporations paying zero in federal taxes? I am going to put an end to that,” the president said.
Even if Congress approves Biden’s proposed increase, a corporate tax rate of 28 per cent still would be the lowest since World War II, with the exception of the past three years.
First enacted in 1909 in the US, the corporate tax rate got as high as 52.8 percent in 1968 before a series of cuts in the 1970s and 1980s.
Among members the OECD, the US has a relatively high official tax rate after France and Colombia at 32 percent, and Australia, Mexico and Portugal at 30 per cent.
But the average US rate after deductions trails far behind many advanced economies, according to OECD data.
Amazon’s senior vice president for policy and press Jay Carney defended the company’s use of research and development tax credits.
“If the R&D Tax Credit is a ‘loophole,’ it’s certainly one Congress strongly intended,” he wrote on Twitter, noting that it had been extended by lawmakers several times since its inception in 1981 and was made permanent by president Barack Obama in 2015.
Biden contended that the corporate tax hike was “not about penalizing anyone. I have nothing against millionaires and billionaires.”
The eight-year investment plan “builds a fairer economy that gives everybody a chance to succeed,” he said, noting it would “create millions of jobs, good-paying jobs.”
Business groups have sent early signs of their opposition to the Biden plan.
“We believe the proposal is dangerously misguided when it comes to how to pay for infrastructure,” the powerful Chamber of Commerce said in a statement.
And the Business Roundtable said it “strongly opposes” a generic corporate tax increase.