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Raising the corporate income tax rate would make taxes fairer.

As a 2021 Biden Administration White House statement explains, “The current tax system unfairly prioritizes large multinational corporations over Main Street American small businesses. Small businesses don’t have access to the army of lawyers and accountants that allowed 55 profitable large corporations to avoid paying any federal corporate taxes in 2020, and they cannot shift profits into tax havens to avoid paying U.S. taxes like multinational corporations can. U.S. multinationals report 60 percent of their profits abroad in just seven low tax jurisdictions that, combined, make up less than 4 percent of global GDP. These corporations do not make money in these countries; they just report it there to take a huge tax cut. In 2018, married couples making about $150,000 working at their own small business paid over 20 percent of their income in federal income and self-employment taxes. By contrast, U.S. multinational corporations paid less than 10 percent in corporate income taxes on U.S. profits.” [73]

Large corporations have the ability to pay more taxes without much effect. Kimberly Clausing, Deputy Assistant Secretary for Tax Analysis at the US Department of the Treasury, stated, “Corporate taxes are paid only by profitable corporations, and for those without profits, any percent of zero is zero. Also, many companies can carry forward losses to offset taxes in future years. However, companies profiting in the current environment, such as Amazon or Peloton, can reasonably be expected to contribute a share of their pandemic profits in tax payments.” [76]

Clausing explained, “The corporate tax, when it does fall on profitable companies, mostly falls on the excess profits they earn from market power or other factors (due to the dominance of large companies in markets with little competition, luck or risk-taking), not the normal return on capital investment. Treasury economists calculated that such excess profits made up more than 75% of the corporate tax base by 2013. A higher corporate tax rate can rein in market power and promote a fairer economy.” [76]

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