So, a few days ago,  we discussed how we can make a good portion of the personal tax base report more of their income and pay more taxes.  All without raising a single tax rate.

Today, we will do the same for corporate taxes.

Thanks to the TCJA (Tax Cut and Jobs Act) passed under Donald Trump, and the CARES Act (passed in Spring 2020), a bunch of US corporations paid NO taxes at all to the US Treasury- despite earning very, very reasonable profits.  How much?  These 55 companies earned more than $ 40 billion in their most recent fiscal year.  (Analysis by Institute on Taxation and Economic Policy, ITEP.)

As a result of these breaks, the 55 companies didn’t shell out $ 8.5 billion in taxes; instead, they collected $3.5 billion in rebates.  A net gain of $ 12 billion!

The ITEP looked further at corporate revenue and taxes.  They found that 26 companies have not had to shell out one dime for taxes since 1977.  (These firms booked $ 77 billion in profits over that period.  And, collected some $ 5 billion in rebates.  In other words, their tax rate is -6%.)   And, these are well known firms- Nike, FedEx, Dish Network.

Now, let’s consider one of the “great” ways these firms get a free pass.  When these companies pay their executives excessive salaries, using stock options- that effects a free pass. The other ways- R&D tax credits (these would be nice if it were really spent on R&D and not marketing), renewable energy investments, and capital investments are less egregious.

The TCJA has been devastating to the US economy.  Those of you who have been reading my blog for years know that the tax collections in the US have been changing.  Back through 2010, about 45% of the US income came from personal tax collections.  Another 45% came from payroll taxes.  Only 10% came from corporate income taxes.    Here’s a better example to show how corporate taxes have decreased…- in the late 60s, corporations provided almost 30% of federal collections;that sum dropped to less than 9% in the mid 2010’s.   Well, since the 2017 tax cut, corporate collections have been halved.  (This is why we are running such a high budget deficit.)  This fact obtains despite before the pandemic, corporate profits as a share of our Gross Domestic Product doubled from 1980 to 2000.

This is exactly why I am thrilled that Janet Yellen (US Treasury Secretary) is developing a consensus among the world nations to let each company pay a minimum amount of tax to each nation where they have operations- 12% seems to be compromise figure.

That will certainly improve the US’s financial picture.

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