Sen. Elizabeth Warren (D., Mass.) floated a new proposal today aimed at requiring large corporations to pay higher taxes—the latest policy proposal she has released during her 2020 presidential campaign.
Under the proposal, companies would have to pay a 7 percent surtax on worldwide profits over $100 million. This tax would be on top of any other taxes the corporation has to pay would effectively raise the top rate on most S&P 500 and Russell 1000 companies from 21 percent to 28 percent.
Since President Trump's election in November 2016, equities have climbed more than 40 percent—and much of the gain is attributable to the cut in corporte taxes from 35 percent to 21 percent. Warren's proposal would take back half of the tax cut that the biggest companies received.
"It will make our biggest and most profitable corporations pay more and ensure that none of them can ever make billions and pay zero taxes again," Warren said in a self-published essay on Medium.
About 1,200 public companies would be subject to the tax, and the proposal would raise a little over $1 trillion in revenue over 10 years, according to an estimate from University of California, Berkeley economics professors Emmanuel Saez and Gabriel Zucman.
Warren said she also thinks that "loopholes" need to be closed in the existing corporate tax code, but that her new tax is necessary because "enormous companies with armies of lawyers and accountants will always try to exploit any deductions and exemptions that remain."
For instance, Amazon reported more than $10 billion in profits and paid zero federal corporate income taxes. Occidental Petroleum reported $4.1 billion in profits and paid zero federal corporate income taxes.
“In fact, year after year, some of the biggest corporations in the country make huge profits but pay zero federal corporate income taxes on those profits,” Warren said. "To raise the revenue we need — and ensure every corporation pays their fair share — we need a new kind of tax that big companies can’t get around," she said.
Warren has offered a number of newsworthy policy proposals since entering the 2020 Democratic presidential primary. Her other proposals include a wealth tax for high-net-worth individuals and a proposal to provide universal access to child care.
Her proposal for a surtax on corporate profits comes as Democrats continue to attack Republicans' 2017 tax reform act, calling it a gift for the wealthy and corporations. Several Democratic presidential candidates have offered proposals aimed at making the very rich pay more in taxes.