Why should FedEx and Nike pay less than you to foot the bill for a $3.5 trillion federal budget?
We favor a proposed “real corporate profits tax,” which would require companies to pay a 7% tax on earnings they report to investors above $100 million.
Democrats in the Senate on Wednesday, not needing or getting a single Republican vote, approved a blueprint for a $3.5 trillion federal budget.
Now comes the question of who pays for it.
We think FedEx should pay a whole lot more before you pay a penny more. Last year, the giant delivery company paid zero federal taxes on $1.2 billion in pretax income. Did you pay nothing? FedEx should pay at least as much as the average bus driver, doctor, cop or teacher.
We think Nike should pay more before you do, too. Nike didn’t pay a dime in federal income taxes last year on almost $2.9 billion in pretax income.
Amazon pays only minimally
And then there is Amazon. The corporate giant of all corporate giants paid federal income taxes at a rate of just 9.4% last year, well below the supposed “statutory” rate of 21% for corporations. For years before that, Amazon paid little or no income taxes.
In Amazon, Jeff Bezos built one of the most successful companies in the history of the world by sending his delivery trucks over taxpayer-funded roads and bridges, filling orders from customers via a taxpayer-funded national telecommunications system and fending off competitors in taxpayer-funded courtrooms.
Yet when it comes to paying federal income taxes, Amazon has pretty much enjoyed a free ride.
Crying poor to the IRS
FedEx, Nike and Amazon are not outliers. Many of our nation’s biggest corporations make huge profits year after year but pay a relative pittance in income taxes because of accounting rules — loopholes, exemptions and deductions — that allow them to cry poor to the IRS. They are allowed to do this even as they report to happy shareholders that they have raked in billions of dollars in profits.
One proposed solution to this problem, which we support, is the “real corporate profits tax,” which would require companies to pay a 7% tax on earnings they report to investors above $100 million. You can bet that the earnings a company reports to its investors is more a reflection of reality than the earnings it reports to the IRS.
On Monday, Sen. Elizabeth Warren, a Democrat from Massachusetts, and Sen. Angus King, an independent from Maine, urged that this fairer tax be built into the revenue side of the Democrats’ $3.5 trillion budget. An analysis by two economists at the University of California, Berkeley, estimates that about 1,300 public corporations would be impacted, with the new policy generating almost $700 billion between 2023 and 2032.
This is a tax entirely in keeping with American capitalism. Every free-market nation levies taxes. It simply recognizes that the U.S. income tax code has been rigged by an army of lobbyists for the biggest corporations to exclude them from having to pay anything close to a fair share.
To conservative critics who call this “socialism,” we would ask: How can you defend Nike paying less in income taxes than the mechanic who fixes your car? And what’s so radical about demanding that FedEx pay more than a local small business?
The proposed tax — we can’t emphasize this enough — starts at corporate incomes above $100 million.
“All we’re saying is that large profitable corporations that are reporting these profits to their shareholders should pay some minimum amount,” King said at a news conference. “Seven percent is what we’re talking about. I see this as simple tax fairness.”
And to conservative critics who say our nation needs a smaller budget, not a stiffer tax on business behemoths, we might say fair point.
This editorial page is inclined, in a broad-strokes way, to look favorably upon the Democrats’ $3.5 trillion budget package. We favor the additional investment in such priorities as universal pre-K, free community college and efforts to combat climate change. But reasonable people can disagree on the proper size and scope of the federal budget.
Who picks up the tab?
Our point today is only this: However big or small the next federal budget shakes out to be, somebody will have to pick up the tab.
Why should ordinary American taxpayers and small businesses be required to foot the bill while some 1,300 of the world’s biggest corporations — including the likes of FedEx, Nike, Archer-Daniels-Midland, Consolidated Edison, Duke Energy and Salesforce — get off scot-free?
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