In November, a large coalition of business groups, including the US Chamber, the NAM and the Business Roundtable, warned congressional leaders that allowing firms to lower their tax burdens by deducting more interest was necessary to “protect the US economy, and particularly small and medium-sized businesses, from damaging job losses that will be felt across the country”. Under the law, most still get this subsidy, though some of the country’s largest corporations might not be able to claim the entire amount in a single year. The third provision that industry groups – particularly those representing debt-reliant private equity funds – are fighting to roll back is a more restrictive cap on the amount of interest firms can deduct from their taxable income each year.īefore the Trump tax cuts, the US tax code generally allowed companies to deduct the full amount of interest. “You could do both of those things for less money than one of the corporate tax cuts.” ‘Why did you guys support the Trump tax law in the first place?’ The non-partisan Congressional Budget Office forecasts that extending the latter policy – known as “bonus depreciation” – would cost about $325bn over the next decade, which “is more than the combined cost of universal pre-K and free community college tuition for 10 years”, said Christopherson. Corporations would be free to deduct the entire amount of their research and “experimentation” expenses, as well as the full cost of some new equipment purchases, from their taxes immediately, instead of spreading out the deductions over time. If today’s campaign succeeds, these “ pay-fors” would be scaled back or eliminated entirely. The three pieces of the tax code now in the crosshairs of corporate America were designed to help bring the official 10-year cost of the 2017 law below $1.5tn, which allowed Republicans in the Senate to pass the bill without any Democratic votes. Photograph: Stephen Brashear/Getty Images View image in fullscreen Kevin Johnson, chief executive of Starbucks, during the corporation’s annual shareholders meeting in Seattle in 2018. The non-profit Institute on Taxation and Economic Policy (Itep) found that 91 Fortune 500 companies – including Chevron, Starbucks and Amazon – paid zero federal income tax that year. In practice, many corporations pay far less than 21%: in 2018, the year after the law went into effect, the average tax rate actually paid by “profitable large corporations” fell to 9%, according to the US Government Accountability Office. The centerpiece of the law was a permanent reduction in corporate income taxes that saw the top rate owed by many of the world’s biggest companies plummet from 35% to 21% – an outcome “beyond their wildest dreams”, Christopherson said. “Corporations are literally going wild over this,” Trump said when he signed the bill.īecause so many of the law’s benefits were tilted toward people who were already wealthy and people who received income from the stock market rather than salaries or wages – two constituencies that are disproportionately white – the Trump tax cuts further exacerbated racial wealth disparities, according to independent reports. The tax provisions that industry groups are now seeking to roll back were part of an accounting two-step that in 2017 helped congressional Republicans deliver Donald Trump’s signature legislative achievement: about $1.5tn in new tax cuts that overwhelmingly benefited corporations, wealthy Americans and foreign owners of US stocks. And also, we want you to double down and give us $600bn more.’” ‘Corporations are literally going wild over this’ “Corporations are saying: ‘We want to keep every last one of those corporate tax cuts that we got. “It’s the classic, ‘We want to have our cake and eat it too,’” said Sarah Christopherson of Americans for Tax Fairness (ATF), an advocacy coalition. The non-partisan Committee for a Responsible Federal Budget estimates these tax cuts would add $650bn to the federal deficit over the next decade. The organization, which in 2017 called the law “a grand slam”, predicts a million job losses over the next two years without additional tax breaks. Photograph: Jabin Botsford/The Washington Post via Getty ImagesĪn ad from the National Association of Manufacturers, another trade group, claims US companies are “investing billions into the economy” but warns that unless Congress cuts corporate taxes further, “we risk losing it all”. Bolten led the Business Roundtable when the organization initially lauded Trump’s tax cuts. View image in fullscreen Josh Bolten, chief executive of the Business Roundtable, waits alongside economic advisers Larry Kudlow and Kevin Hassett for Donald Trump to arrive at the White House on 29 April 2020.
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