It’s been about two years since President Donald Trump passed the Tax Cuts and Jobs Act of 2017 (TCJA) and cut the corporate tax rate from 35 percent to 21 percent. President Trump and his Republican cohorts in Congress relied on old trickle-down rhetoric filled with bold claims that the average household income would grow after the TCJA due to opportunities for investments that could now be made in the private sector. Unfortunately for the average American taxpayer, these promises have not come close to being fulfilled. An International Monetary Fund study of balance sheet data for listed S&P 500 firms found that a mere 20 percent of the increased post-tax cut cash balance in 2018 was spent on research and development or capital expenditures. The other 80 percent went to investors through dividend payouts, share buybacks, and other asset adjustments.
What’s worse is that there are some major corporations who continue to skirt their obligation to pay their fair share of taxes. A report released by Fair Tax Mark, a tax transparency group based in the UK, indicted some of Americas’ biggest tech companies for corporate tax avoidance earlier this week. The group claims Amazon, Apple, Facebook, Google, Microsoft, and Netflix have collectively dodged over $100 billion in global taxes so far this decade.
In an absolute shocker to no one, Amazon, whose CEO Jeff Bezos is the world’s richest man, was the worst offender. In the past decade, Amazon revenues went up to $960 billion with net profits of $26.8 billion. However, the company only paid $3.4 billion in income taxes. Amazon was supposed to pay 35 percent in taxes for seven of the eight years Fair Tax Mark conducted their study, but the group’s analysis showed that they only paid a 12.7 percent tax rate on their profits over the decade. Facebook was deemed the second-worst offender in the group’s ranking of the companies’ tax conduct with a 10.2 percent tax rate on its profits. Google was third as they only paid a 15.8 percent tax rate — they actually paid even less in foreign taxes at a 7.1 percent effective tax rate. Netflix, which apparently takes particular care to make sure their record keeping is difficult to sift through, had the same effective tax rate as Google. Fifth was Apple, which likes to pitch itself as “the world’s largest taxpayer.” Although they did make the largest tax contribution of the six companies, they only paid a 17.1 percent cash tax as a percentage of profit. Microsoft was the most benign offender in the group’s rankings, but the technology giant still fell short of both its 35 percent and 21 percent tax obligations in the period studied, as they paid a mere 16.8 percent effective tax rate.
Fair Tax Mark calls the companies the Silicon Six (which they would call the Silicon Slick if they were funny) and they insist that despite the companies’ claims that they are complying with tax practice. Many of the profits are shifted to tax havens like Bermuda, Ireland, Luxembourg and the Netherlands — or other countries with low-tax rates. Given the sheer amount of market power and money that these multinational corporations control, it is particularly vexing that they so blatantly disregard their tax responsibilities to society. They are weakening the United States’ and other nations’ ability to fund the supports and pillars that are needed for our economies and societies to generate wealth and live prosperously. Without this tax pool, governments don’t work as well, and in turn they can’t perform their necessary functions to the best of their powers.
As college students, we are not quite at the point where we have to be concerned about taxes. But there is an election coming up, and our duty as citizens commands us to vote for the candidate that we think will do the best things for our country — unless we choose to vote for our parents’ pocketbooks. Right now there are only two candidates who have proposed eliminating tax breaks for “offshoring” — an issue academics, advocacy groups, and experts all agree contributes to big multinational corporation’s ability to avoid paying their fair share of taxes to their host nations and other countries they operate in.
Presidential candidates Sen. Bernie Sanders (D-VT) and Sen. Tulsi Gabbard (D-HI) both have plans that could stop companies from deferring taxes on offshore profits, prevent companies from establishing fake headquarters in tax havens, and establish measures that make sure companies cannot totally neglect their US tax liabilities. While trying to fight against offshoring may be too radical for the other candidates, there is a clear desire to see the corporate tax rate increased from the TCJA levels. Sen. Amy Klobuchar (D) wants to raise the corporate income tax rate to 25 percent from the current 21 percent established by the TCJA. Former Rep. John Delaney (D) has suggested upping the rate to around 27 percent, while former Vice President Joe Biden (D) wants to raise the rate to 28 percent. It’s worth noting that neither Klobuchar, Delaney, nor Biden are pushing a return to the 35 percent corporate tax rate at this point in their campaigns.
Unless your dad is Jeff Bezos, this increase in taxes should piss you off. If you are pissed off, but still don’t want to watch the debates, that’s understandable — the past four years have been the best time of our lives to feel politically disaffected. But in less than a year, we will have an opening that some people have been aching for since their first semester of freshman year. With winter break right around the corner, take some time at home to look online about the issues that concern you most and see how the remaining Democractic candidates feel about the issues important to you, if you plan to vote that way. If you don’t, it still might be important to pay attention to the other Repubican candidates depending on how and when the impeachment proceedings play out — but it seems that Trump’s competitors all favor even lower tax rates.
Taxes might not be a glamorous political issue, but they are vital for the good of our country and many others. As a nation, we’ve had about four years to complain, opine, and really get on our soap box about how angry we are with President Donald Trump and his administration. It would be a shame if we made the same mistakes as last time when it comes time to head to the polls. •
