Senate Democrats propose corporate minimum tax for spending package

Senate Democrats propose corporate minimum tax for spending package
© Greg Nash

Key senators on Tuesday released legislative text of a proposal for a minimum tax on corporate profits, which they are eyeing as a way to help pay for Democrats’ social-spending package.

The proposal would create a 15 percent minimum tax on corporate profits as reported on financial statements. It would apply to about 200 companies with more than $1 billion in profits, according to a fact sheet from the senators.

The proposal is aimed at preventing large corporations from paying zero in federal income taxes. According to the left-leaning Institute on Taxation and Economic Policy, at least 55 large U.S. corporations paid no federal income taxes in 2020, including FedEx and Nike.

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“The most profitable corporations in the country are often the worst offenders when it comes to paying their fair share. Year after year they report record profits to shareholders and pay little to no taxes,” Senate Finance Committee Chairman Ron WydenRonald (Ron) Lee WydenSenate parliamentarian looms over White House spending bill Democrats push tax credits to bolster clean energy Five reasons for concern about Democrats' drug price control plan MORE (D-Ore.) said in a statement. “Our proposal would tackle the most egregious corporate tax dodging by ensuring the biggest companies pay a minimum tax.”

Wyden released the proposal along with Sens. Elizabeth WarrenElizabeth WarrenWarren calls on big banks to follow Capital One in ditching overdraft fees Crypto firm top executives to testify before Congress Massachusetts Gov. Charlie Baker won't seek reelection MORE (D-Mass.) and Angus KingAngus KingAmazon, Facebook, other large firms would pay more under proposed minimum tax, Warren's office says Senators look to defense bill to move cybersecurity measures Energy information chief blames market for high fuel prices MORE (I-Maine), who introduced a bill on this topic in August.

The fact sheet states that the value of business credits such as those for research and development and clean energy would be preserved, and businesses would be able to take foreign tax credits.

The corporate minimum tax is one of several proposals that Democrats are considering for the social-spending package in light of Sen. Kyrsten SinemaKyrsten SinemaBiden should seek some ideological diversity Budowsky: Why GOP donors flock to Manchin and Sinema Pence-linked group launches 0K ad campaign in West Virginia praising Manchin MORE’s (D-Ariz.) objections to raising tax rates. Wyden is expected to release a second tax proposal, to tax billionaires’ investment gains annually, later on Tuesday.

Sinema responded to the proposal, saying she backed the move on Twitter.

"This proposal represents a commonsense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do," Sinema tweeted.

The senators who offered the minimum tax proposal say it could raise hundreds of billions of dollars over a decade.

Wyden and Senate Majority Leader Charles SchumerChuck SchumerProgressive groups urge Schumer to prevent further cuts to T plan Collins says she supports legislation putting Roe v. Wade protections into law Biden should seek some ideological diversity MORE (D-N.Y.) discussed the corporate minimum tax proposal during Senate Democrats’ lunch on Tuesday and it received significant support, according to a Democrat in attendance.

The release of the proposal comes as Democrats are hoping to reach an agreement on a framework for their social-spending bill this week. 

Warren previously proposed a version of the minimum tax proposal during her 2020 presidential campaign, and President BidenJoe BidenManchin to vote to nix Biden's vaccine mandate for larger businesses Congress averts shutdown after vaccine mandate fight Senate cuts deal to clear government funding bill MORE also has expressed support for this idea.

“I’m glad to have worked alongside Senator King and Chair Wyden, with the support of President Biden, to announce this proposal so that we can raise essential revenue needed to invest in families and our economy,” Warren said.

Jordain Carney contributed.

--Updated at 5:10 p.m.