Such companies, including Amazon, Netflix and others, have been able to pay no federal taxes in recent years because they were able to use tax breaks from building facilities, investments, paying employees in stock, or carry over losses from years where they weren’t profitable. The minimum book tax would give credit for foreign taxes paid and continue to allow carryovers. The revenue estimate of $400 billion over 10 years is based on its conclusion that about 300 companies would end up being liable for the tax.
Biden is also proposing to double Gilti, a minimum tax on foreign profits that became law as part of the 2017 Republican tax overhaul, to 21%. That would raise $340 billion in revenues, according to a September paper titled “Taxing the Rich: Issues and Options” from New York University professors Lily Batchelder and David Kamin. But raising the foreign rate to 21% while increasing the corporate rate to 28% still encourages corporations to store assets and operate offshore, though less so than under the current system where the rates are 10.5% and 21%, respectively.
Biden is also calling for capping the value of tax breaks for the wealthy at 28%, which would raise $310 billion, according to figures cited by his campaign from Batchelder and Kamin. He would also eliminate capital gains loopholes for real estate, including an end to special qualifying rules for pass-through income deduction.
The former vice president has previously committed to raising the top individual tax rate to 39.6% – its level before the 2017 Republican tax cuts became law – and to increasing the top corporate tax rate to 28%. It was 35% before the GOP overhaul and has since been cut to 21%.
Those two measures would raise $820 billion in revenues, according to Batchelder and Kamin. Closing the stepped up basis loophole would raise $440 billion, according to the left-leaning Americans for Tax Fairness.
Additional revenue-raising measures that Biden supports include ending $40 billion in fossil fuel subsidies and taxing capital gains as ordinary income for taxpayers with more than $1 million income to raise $800 billion over a decade.
(Michael Bloomberg is also seeking the Democratic presidential nomination. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)
--With assistance from Laura Davison.
This article was provided by Bloomberg News.