Elizabeth Warren Wants to Collect More in Corporate Profits Taxes

Elizabeth Warren Wants to Collect More in Corporate Profits Taxes

John Harwood reports:

Democratic presidential candidate Elizabeth Warren proposes raising $1 trillion in government revenue from a new tax on profits of the largest corporations. The proposed surtax would prevent Amazon and other companies with profits exceeding $100 million from wiping out their tax liabilities altogether. Instead of taxable corporate income as defined by the IRS, the 7% surtax would apply to profits companies report to their investors.

A lot to like. Look – I hated that 2017 tax scam, which we were told would clean up how corporations are allowed to shield income by all sorts of tricks including transfer pricing manipulation. Alas, its complexity was a boondoggle for shifty tax attorneys rather than simplification and closing loopholes. So proposals to “repeal and replace” this awful tax deform are highly welcomed. But this part of Harwood’s reporting was dreadful:

Warren cited two high-profile examples: Amazon has reported $10 billion in 2018 profits but zero in U.S. corporate taxes; Occidental Petroleum has reported $4.1 billion in profits and also paid zero.

He was just on MSNBC again talking about how Occidental Petroleum makes a lot of profits but reports little U.S. taxable income. Any Wall Street Journal reporter should know to check the 10-K filing for U.S. based oil multinationals as it is often the case that most of their income is generated by foreign oil producing affiliates. Since Harwood could not be bothered, I did. Its pretax income was $5603 million in 2018 and I was surprised to learn that $3431 million was generated in the U.S. with the remaining $2177 million generated in other nations where oil profits often are taxes at very high rates. In fact, this company paid $1014 million in foreign income taxes. Now as far as the claim that it paid zero U.S. income tax, that is not what they reported to their investors as the 10-K filing noted U.S. income taxes were $463 million. A 13.5 percent effective tax on its U.S. sourced income sounds low to me but it is not zero.