Op-ed: Biden plan to close tax loopholes for corporations isn't anti-business - 0 views
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Recent weeks have seen corporate leaders and investors mobilize publicly and privately to oppose President Biden’s proposed overhaul to the tax code
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But this political calculus belies the truth of Biden’s plan: eliminating tax loopholes for major multinational corporations would actually put corporations that operate in the United States, and American workers, in a more competitive position compared to their international peers.
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The current US corporate tax rate is 21 percent, but, as recent headlines of dozens of Fortune 500 companies paying zero dollars in federal income taxes last year attest to, there are many ways for major corporations to avoid paying that much.
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Many of the most effective ways corporations avoid taxes involve shifting their profits and operations overseas and leaving companies that operate solely in the US at a massive competitive disadvantage.
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they automatically get a 50 percent discount on their taxes on all profits booked overseas. American profits are taxed at the full corporate rate of 21 percent, but profits of foreign subsidiaries are only taxed at 10.5 percent.
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These multinationals are then able to subtract the taxes they pay to foreign governments from what they owe the IRS. If that amount is more than the 10.5 percent they would typically have to pay, they owe the US government nothing.
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Basically, the more equipment and factories a company has overseas, the more tax-free profit it can earn
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When you combine these loopholes with a cadre of other tax breaks, it allows many companies to completely avoid paying their federal dues. How are domestic companies and mom and pop operations supposed to compete?