Schakowsky, Sanders Introduce Legislation to Ensure Corporations Finally Pay Their Fair Share in Taxes
WASHINGTON - As millions of Americans prepare to file their taxes ahead of the federal deadline on April 15, U.S. Representative Jan Schakowsky and U.S. Senator Bernie Sanders (I-VT) today introduced legislation to ensure that large corporations are finally required to pay their fair share. The Corporate Tax Dodging Prevention Act would stop corporations from sheltering profits in tax havens like the Cayman Islands and Luxembourg, eliminate tax breaks for companies that ship jobs overseas, and close loopholes in the tax code that allow corporations to get away with paying little to nothing in taxes.
According to the Joint Committee on Taxation, closing corporate use of offshore tax havens would raise more than $1 trillion in revenue over 10 years. This legislation would also roll back the Trump corporate tax rate cut and restore the top rate to 35% – a move that would raise an additional $1.3 trillion over 10 years.
“We live in the richest country in the world at the richest moment in history, yet many Americans are unable to feel the magnitude of our wealth. One of the biggest problems we face is income inequality. As big corporations continue to rake in record profits, there are many families struggling to put food on the table,” said Congresswoman Jan Schakowsky. “Thanks to President Joe Biden, we are growing the economy from the bottom up and the middle out, but we must go even further by passing the Corporate Tax Dodging Prevention Act to help put the interests of everyday Americans ahead of billionaires and transnational corporations. I thank Senator Sanders for devoting his career to tackling income inequality and am proud to partner with him on this important measure.”
“At a time of massive wealth and income inequality and soaring corporate profits, it is an outrage that many large, profitable corporations continue to pay little to nothing in federal income taxes,” said Senator Bernie Sanders. “As working people struggle to pay rent and put food on the table, we have a corrupt and rigged tax code that is designed to benefit the wealthy and the powerful at the expense of working families. Meanwhile, Republicans would make a bad situation even worse by providing even more tax breaks to their corporate campaign contributors and the billionaire class while proposing massive cuts to Social Security, Medicare, and Medicaid. That is unacceptable. We need to create an economy and a government that works for all of us, not just the top one percent. And, one of the ways we can begin to do that is by making sure that large corporations pay their fair share of taxes. American workers should not be paying more in federal income taxes, in a given year, than profitable companies like Target, Amazon and T-Mobile.”
Despite record breaking profits, many of the largest and most profitable corporations in the United States continue to pay little to nothing in taxes. The Corporate Tax Dodging Prevention Act would build on the important progress made by the Inflation Reduction Act in reversing corporate tax breaks – which included a 15% minimum tax on large corporations that will raise $222 billion over the next 10 years. Sanders’ legislation would go well beyond this by entirely shutting down offshore tax avoidance and restoring the top corporate tax rate to 35% – where it was before Trump became president. Together, these policies will raise more than $2.3 trillion over the next 10 years.
According to a study from the Government Accountability Office (GAO), 34% of large profitable corporations paid nothing in federal income taxes during the first year that the Trump tax cuts went into effect. Overall, the study found that large, profitable American corporations on average paid less than 9% of their profits in federal income taxes in 2018. Another study found that 109 large profitable corporations paid zero federal income tax in at least one of the last five years. For example, any American worker who paid a single dollar in income taxes, paid more than the below companies paid in corporate incomes taxes:
- Amazon in 2017 and 2018
- Target in 2022
- AT&T in 2021
- Whirlpool in 2022
- T-Mobile in 2022 & 2018-2020
- Dish Network in 2022 & 2020
How do companies get away with paying little to nothing in taxes? The biggest loophole in the corporate tax code is the one allowing corporations to pay a lower or even zero percent tax rate on profits stashed in tax havens. This loophole explains why American corporations report 59% of their offshore profits in tax havens and the absurd situation where one five-story office building in the Cayman Islands is “home” to about 20,000 corporations.
The collapse in corporate revenue is notable both in the U.S. and internationally. The corporate tax used to represent about 30% of total revenues to the federal government in the 1950s, but that number is now down to just 9% in 2023. Similarly, U.S. corporate tax revenue as a percentage of the economy is one of the lowest among major economies and half the level of the Organisation for Economic Co-operation and Development countries (OECD) average.
This would change under the Corporate Tax Dodging Prevention Act. In addition to putting an end to offshore tax havens and tax breaks for companies that ship jobs and factories overseas, this legislation would reform the tax code by:
- Restoring the top 35% corporate tax rate, the rate it was from 1993-2017;
- Ending the rule allowing American corporations to pay a lower or zero percent tax rate on offshore earnings compared to domestic income;
- Closing loopholes allowing American corporations to shift income between foreign countries to avoid U.S. taxes;
- Repealing the “check-the-box” and “CFC Look-Thru” offshore loopholes;
- Preventing multinational corporations from stripping earnings out of the U.S. by manipulating debt expenses; and Preventing American corporations from claiming to be foreign by using a tax haven post office box as their address.
The Corporate Tax Dodging Prevention Act has been endorsed by Americans for Tax Fairness (ATF), a coalition of more than 420 national, state, and local organizations.
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