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Wed Aug 17, 2022, 01:45 PM

Consumers unlikely to feel 15 percent corporate tax

By Nir Kaissar / Bloomberg Opinion

The Inflation Reduction Act, Democratsí tax, climate and health-care bill that Congress passed last week and was signed by President Biden on Tuesday, calls for a 15 percent minimum tax on big corporations. Critics say the minimum tax will ultimately be a tax on everyone because companies will raise prices and squeeze wages to compensate for higher tax bills. Donít count on it.

The minimum tax will apply to companies with at least $1 billion in profits, which essentially means big, publicly traded corporations. It also means anyone can look at companiesí publicly available financial statements to determine which will be affected and to what extent. So thatís what I did. Specifically, to approximate the way the bill works, I looked for companies with an average adjusted income before tax of $1 billion or more during their previous three fiscal years (the adjustment is intended to exclude unusual, nonrecurring items that arenít likely to affect future profits).

Not surprisingly, I found that the minimum tax will affect a relatively small number of companies. I counted 368 companies with incomes that high, and of those, 127 paid taxes at a rate less than 15 percent last year. All but a handful are among the biggest 500 U.S. companies by market value, and most are household names, notably technology titans Apple and Microsoft, electric-car maker Tesla, pharmaceutical companies Eli Lilly and Pfizer, and private equity powerhouse Blackstone.

They can also all afford to pay more in taxes. Even after accounting for the shortfall ó that is, the difference between the taxes they paid last year and what they would have owed applying a 15 percent minimum tax ó the vast majority would still have made well more than $1 billion in profits last year, and the rest are not far behind. In fact, the median shortfall as a percentage of adjusted pretax income was just 6.6 percent across all companies last year. So the minimum tax doesnít appear to be much of a burden.

https://www.heraldnet.com/opinion/comment-consumers-unlikely-to-feel-15-percent-corporate-tax/

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