More than 100 US companies are paying an average effective tax rate of 1.1%, according to new data released by a top Democrat.
The data, released on Thursday by Senate Finance Committee Chair Ron Wyden, a Democrat from Oregon, showed that in 2019, between 100 and 125 companies with an average net book income of $8.9 billion paid an average effective tax rate of 1.1%.
The analysis of the data was done by the Joint Committee on Taxation, a nonpartisan entity within Congress. The JCT’s analysis looked at companies that reported an excess of $1 billion in income, as publicly reported in financial statements. They also compared that to the cash tax paid, based on what companies filed in tax returns.
Wyden had requested the JCT study. He and colleagues in the Democratic party are pushing to impose a minimum of 15% tax on profits that billion-dollar companies earn.
“Our corporate minimum tax is a back-stop to ensure that the most profitable mega-corporations are not paying no taxes at all while reporting record profits to their shareholders,” Wyden said in a statement to MarketWatch.
“The American people are with us here. When you talk to working folks, nothing makes their blood boil like the most profitable mega-corporations paying little to no taxes,” he added.
Higher corporate taxes would hurt the US economy, Republicans countered.
Mike Crapo, a Republican Senator from Idaho who is a ranking member of Wyden’s committee, said that any increases in the corporate tax rate would filter down to workers, to capital, and to shareholders, including those who invest in pension plans and 401(k )s.
He also added that about half of the taxes paid would fall on manufacturers.
“The National Association of Manufacturers has indicated that because half of the impact of this will be on that industry, that this would be a reduction of our gross domestic product by $68.45 billion, a reduction of employment by 218 thousand workers and a reduction of employment income of $17 billion,” Crapo said in a statement. “These numbers show, very graphically, where the burden of this tax falls; contrary to the argument that this is just a tax on tax-cheats.”
Write to MarketWatch reporter Aarthi Swaminathan at [email protected].
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