Even though corporate profits are way up, taxes collected on those profits are at near record lows, according to research compiled by the Economic Policy Institute (EPI) and Americans for Tax Fairness (ATF). This is a recipe for damaging the nation’s economic wellbeing at a time when we need to lift the middle class the most.
Tax loopholes allow corporations to both rake in tons of money and decrease the tax they pay on those profits. Among the biggest loopholes, according to EPI and ATF, is a legal scheme called deferral. Through it, “American multinational corporations can indefinitely postpone payment of taxes owed on profits held offshore.”
The EPI/ATF report said corporations stockpiled $2.4 trillion in profits in foreign subsidiaries. Just four companies – Apple, Pfizer, Microsoft and General Electric – control one-quarter of those profits,” the report states.
If taxed in the U.S. those offshored profits would add $700 billion to the national treasury.
“These large multinational corporations can certainly afford to pay the taxes they owe,” said EPI budget analyst Hunter Blair.
Yet billionaire real estate mogul and Presidential candidate Donald Trump wants to give himself and his corporate buddies an even bigger tax break. Under Trump, the corporate tax rate would be cut from 35 to 15 percent. That would reduce federal revenue by $1.9 trillion over the next decade, reports The New York Times.
Why should we care?
“When corporations avoid paying billions of dollars of U.S. taxes they would otherwise owe, the tax burden on responsible corporations and citizens is unfairly increased,” states a resolution passed at AFSCME’s national Convention this July.
Trump says he wants to help working families, but in the topsy turvey world of Trumponomics, it’s the wealthiest Americans and corporations whose profits are already at record high levels that would profit the most from his ill-conceived tax-cutting scheme, according to EPI’s Blair.
The EPI/ATF report is a wake-up call for voters and lawmakers who think Trump’s plan to slash the corporate tax rate is the solution for the nation’s economic ills. In reality, it will only add to them.