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Elizabeth Warren's proposal to [Tax] Corporate Profits
durandal4532
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Registered User regular
I just finished up my taxes and I thought hey, why are my taxes kind of weirdly low considering and also why are the roads, public utilities, public transit, public infrastructure, and in general all collectively held public goods near me in a state of ongoing catastrophic disrepair?
Elizabeth Warren has a proposal for funding the public good that sidesteps the average US Citizen's deep aversion to directly funding things they use constantly and love wholeheartedly: let's tax gigantic corporate entities! We've got a ridiculously unequal system set up, why not tax like a thousand or so corporate entities that have grown into behemoths at a slightly higher rate in order to fund basically every other service our citizens need?
https://www.thedailybeast.com/elizabeth-warrens-new-corporate-tax-plan-would-cost-amazon-dollar698-million
I'm into it. Whenever I speak to folks about taxing ridiculous wealth people bring up that well, the wealthy will just use their wealth to fund research into how to become Ascended and then rain fire upon us from the heavens for our impudence, but I feel like even taking into account the fact that there's going to be a lot of attempted and successful malfeasance, it's worth making it a priority to respond to gross inequity with some attempt to fund things using the ill-gotten gains of gigantic corporate entities.
Elizabeth Warren has a proposal for funding the public good that sidesteps the average US Citizen's deep aversion to directly funding things they use constantly and love wholeheartedly: let's tax gigantic corporate entities! We've got a ridiculously unequal system set up, why not tax like a thousand or so corporate entities that have grown into behemoths at a slightly higher rate in order to fund basically every other service our citizens need?
https://www.thedailybeast.com/elizabeth-warrens-new-corporate-tax-plan-would-cost-amazon-dollar698-million
Sen. Elizabeth Warren (D-MA), who has defined her 2020 candidacy with a series of detailed policy proposals, has a plan to impose a new tax on America’s largest companies like Amazon.
“It’s almost Tax Day, and chances are you’ll be paying federal taxes this year. Maybe it’s a lot, maybe it’s a little,” Warren writes in a Medium post unveiling the policy. “Well, guess what? You will be paying more for running the federal government than a bunch of big American corporations that made billions of dollars in profits in the last year.”
The “Real Corporate Profits Tax,” revealed on Thursday morning applies to companies that report more than $100 million in profits. The first $100 million would not be touched, but under the plan, for every dollar of profit above that $100 million, the corporation would pay a 7 percent tax.
Warren estimates that Amazon would pay $698 million as opposed to zero federal corporate income tax and that Occidental Petroleum would pay $280 million.
“It’s a small new tax—but because our richest, biggest corporations are so skilled at minimizing their taxes under our current system, that small new tax will generate big new revenue,” she writes. “According to an estimate from economists Emmanuel Saez and Gabriel Zucman at the University of California-Berkeley, the tax will bring in $1 trillion in revenue over the next ten years—just from the massive profits of the thousand or so richest companies in the country.”
I'm into it. Whenever I speak to folks about taxing ridiculous wealth people bring up that well, the wealthy will just use their wealth to fund research into how to become Ascended and then rain fire upon us from the heavens for our impudence, but I feel like even taking into account the fact that there's going to be a lot of attempted and successful malfeasance, it's worth making it a priority to respond to gross inequity with some attempt to fund things using the ill-gotten gains of gigantic corporate entities.
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If you think profit-driven corporations will just accept a new tax without a measure to make up the loss of profit, you are incredibly naïve.
I agree that they should pay their fair share, I just don't think this form of taxation will actually do that. We will just end up taxing ourselves.
I think you would have to hit the shareholders directly with a tax to actually accomplish anything.
Prices already rise to market maximum.
Oh well good, let's pack it up and give up.
In fact, let's lower their taxes while we're at it!
Prices should be set by demand. If a corporation can increase profits to make up for this tax then why haven't they already done so.
And if the tax isn't flat then taxes will represent a portion of the profit anyways, thus taking care of the rise in price?
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Automation is a fucking thing, folks, and fewer companies are going to be doing a lot more and aggregating more of the wealth while retaining fewer of the people. This inequity is already playing out on a lesser scale and it is only going to keep going this way. So when people say a law like this will cause fewer jobs, more unemployment, etc? Nope; that is already happening and it has fuckall to do with the rate of taxation on corporations and everything to do with devops, crowdsourced solutions, and general automation gutting the labor force while letting the innovators of this change reap all the benefit.
Creating a means to allow for that kind of innovation and efficiency to thrive and survive (which by the way I fully support - I am a capitalist at heart) should also be married with a responsibility to tend to the people who get fucked by this advancement and consolidation of wealth.
So yeah, don't eat the rich and do not deny them their victory - just enforce responsibility upon them, through pain of prison otherwise, to give back to a society which created the environment upon which they found such undeniable success.
Let's play Mario Kart or something...
They can try to shirk their social responsibility all they like. It should still be done.
Moving beyond the kneejerk ideological reaction to a tax, can you cite a corporation that has a margin of profit they are satisfied with? In what world are these corporations not already firing people and raising prices to the market maximum in the search for more profit?
It’s a bit concerning about the state of our tax law though, that piling on another layer is preferable to just fixing the fucked up loopholes in the first place though.
Lobbyists paid for those loopholes and really the only fear I have is that the lobbyists will get to this sort of thing as well. Outside the problem with passing it in the first place.
We just had this happen with Activision, where they had their most profitable year ever and promptly fired 800 people.
Apple and Samsung both had outstanding years and now they're selling phones for $1200+ when last year the Note 9 and iPhone X were at a grand and seemed excessive.
Handwringing about them raising prices or cutting jobs is missing the forest for the trees.
They will still be doing that.
How is Warren proposing we define profits? Because Amazon is already taxed on it's profits, which is why it paid zero. It had no (GAAP) profits.
GAAP profits and tax profits are different. Amazon reported $10b in net income for 2018 (GAAP). They also reported income tax expense of $1b
This one proposes using the profit you claim to shareholders.
I.e. No telling the shareholders "Record profit!" then telling the IRS "Actually we took a loss"
https://medium.com/@teamwarren/im-proposing-a-big-new-idea-the-real-corporate-profits-tax-29dde7c960d
The claim is zero federal taxes because federal taxes are where they can claim all the various deductions and such
EDIT: Let the hollywood accounting die in a fire
They tried, but unfortunately that fire was also added to Babylon 5's operating costs.
Warren is also proposing we do this, for the record.
I mean, they can claim any deduction for whatever jurisdictions they may have to pay taxes in. Regardless, I have no idea how much in federal income taxes Amazon actually paid last year, but they still reported $1b in income tax expense. Again, GAAP reporting doesn't match tax reporting but it indicates they expect to pay $1b in income taxes related to their 2018 operations.
The majority of those activision layoffs were due to the jobs ceasing to exist, not an attempt to wring further profit. If there is no work for them to do, why would they keep paying them?
They ceased to exist because they changed the direction of the company.
They have no more work for them to do because Activision decided to fire them.
This is a strange circular logic thing you have going on here. None of the employees knew about the firing, so apparently to them the job ending was a surprise. It was done for profit, pure and simple.
Those jobs ceased to exist as orders from some higher power or did the corporation determine they did not want those jobs anymore and thus fired a bunch of people?
I think specifically as a point in this thread the idea is to raise the question that IF jobs can be lost during a period of record profits, why would we feel that a terrifying consequence of any alteration to the tax law that would force companies to actually pay toward the public good is that it might cause job loss?
Like if lower profits and higher profits and steady profits can be followed by a huge cut in jobs, why are we concerned with keeping profits high? We need our jobs to live, not high corporate profits.
I only wish that number were much higher as a percentage and the threshold was much lower than $100,000,000.
If you want to make that argument, that is fine. I would say do it with examples of people actually losing their job for no reason other than to increase profits though. A company being profitable has no bearing on your job, if your job is no longer necessary/capable of being done.
The company being unprofitable would not have kept these people from losing their jobs. It would have results in MORE people losing their jobs.
Well, one of the developers that a large portion of the people were supporting moved to a different publisher. So in that case, "higher power"?
I'm going to need some citation for this if it's to be considered a credible argument.
Sorry, you are right. I meant to say unprofitable, not less profit. I misspoke.
Because their competitors won't. But in this case it doesn't even take any coordination for everyone to raise prices based on the new taxes. Just like tariffs are passed on to consumers.
Yeah, I imagine that if Activision had posted a loss instead of a profit, more than those 800 jobs would likely have been lost. That seems moot under the scope of this law though, since if they had posted a loss, this tax wouldn't be levied.
Just like you can't 'make less money' by moving into the next tax bracket, companies wouldn't make less profit by having to pay tax on some of it. If companies really don't want to eat that 7%, they can always re-invest in the company via increasing employee compensation, or tons of other avenues.
And at no point did I make that claim.
All I said was the people losing the jobs in the incident used as an example, was not based on profit and is of no bearing on this discussion.
I think that's what he was saying though? That the argument 'these taxes would cause an increased financial burden on the companies that pay them, which would lead to job loss' is an incorrect statement, since more and more, we're seeing that there's a total lack of correlation between degree of profit, and employment.
If a company can say 'we posted record profits, and also fired people' they can't also say 'you can't do this thing because it would eat into our profits, and we would need to fire people'.
EDIT: Many of the same companies also said the following policies would lead to similar job loss that's being claimed now
The 40 hour workweek
The Fair Labor Standards Act
The Minimum Wage
Pretty much any brand of safety regulation.
At some point, when a company shoots back with 'but it'll cost jobs!' when referring to regulation or taxation that would be levelled against them, it's okay to call them liars.
I think the intention was to point out that so long as a company is profitable, there's no direct correlation between HOW profitable it is and whether or not it employs a lot of people.
So, there's them paying some federal tax payments. They've had deferred tax assets as they relate to the R&D tax credit but there's probably some garbage losses etc there too. In context...:
and
They had a transition tax of:
Looks something like this:
The breakdown of their "deferred tax assets" look like this:
Are we actually seeing this? The only example that has been given so far has nothing to do with the company making a profit or not.
A company can say, "We posted record profits, but unfortunately had to let people go, as their job was no longer relevant. However if you tax us further, we may have to make MORE layoffs, as we have also recently lost several sources of income."
I'm not even arguing against the tax, I was merely pointing out it was a bad example. I do like the idea of instead of just taxing them more, they are forced to invest that money into their employees, though.
Why would they? If they're a smaller competitor (IE not large enough to be hit by this) and their larger adversary is now paying this tax and is forced to raise prices accordingly, why not keep yours steady and try to expand your market share by offering better value?
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From Amazon's 10-K:
Cash taxes paid, net of refunds, were $412 million, $957 million, and $1.2 billion for 2016, 2017, and 2018.
So, I'm wondering where the zero taxes part is coming from.