Federal policymakers must demand that big corporations "substantially increase" the amount of federal tax they pay under any rewrite of the nation's tax laws, Sen. Elizabeth Warren (D-Mass.) said Wednesday.
One tax proposal supported by President Barack Obama -- allowing U.S. companies to pay less tax on profits generated abroad if that money is repatriated to the U.S. -- amounts to a "giant wet kiss" for multinational companies Warren described as "tax dodgers."
With Washington enamored by the idea of reforming the U.S. tax code in a bid to jump-start economic growth -- a top priority of business interests -- Warren's proposal represents one of the few offered to date by a top elected official that would significantly increase corporations' tax bills.
Large companies are trying to persuade policymakers in Washington to reduce their tax bills by convincing them that the nation's tax code discourages business investment and hiring. Business interests point to other advanced economies that they argue place relatively lower tax burdens on their domestic companies as evidence that the U.S. risks slowing economic growth if it continues to apply allegedly high tax rates on American corporations.
Some senior Democrats and Republicans, including Obama, have latched onto this idea and are trying to push through tax proposals that would slash the amount of tax collected from some large businesses under the guise of improving the nation's economic competitiveness. A bipartisan consensus has begun to emerge that however policymakers reform the U.S. tax code, it should not actually increase the total amount of tax collected from businesses.
That's rubbish, according to Warren.
"What’s the problem with our corporate tax code? It’s not that taxes are far too high for giant corporations, as the lobbyists claim. No, the problem is that the revenue generated from corporate taxes is far too low," Warren said.
To support her point Warren cited White House data showing that corporations' U.S. tax bills have significantly shrunk relative to total federal revenue. In the 1950s, Warren said, corporations were responsible for roughly 30 percent of the federal government's revenue. That figure has since dropped to about 10 percent, Warren said.
In addition, Warren said, roughly 75 percent of the countries that make up the Organization of Economic Cooperation and Development -- a rich nations' club -- collect more tax revenue from corporations as a percentage of annual economic output than the U.S.
Warren didn't detail how much more she reckons corporations should be paying. But in citing statistics and anecdotes that she believes demonstrates large companies' creativity in avoiding their "fair share" of taxes, Warren said: "One of the hottest investments in America in the past decade hasn’t been biotech or Big Oil -- it’s been tax lawyers."
Warren added, "If America is going to build 21st-century infrastructure, operate 21st-century schools and invest in 21st-century research, then giant corporations must pay a fair share of the cost."