Bernie Sanders Spent Tax Dollars on Study to Conclude He Needs More Tax Dollars
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Sen. Bernie Sanders (D-Vt.) commissioned the Government Accountability Office (GAO) to conduct a study on how much corporations are paying in taxes. After it’s completion, Sanders issued a press release with a provocative headline that called for higher taxes:
“While House Republicans want to make huge cuts to Social Security, Medicare and Medicaid because of their ‘serious concern’ about the deficit, they voted to provide over a trillion dollars in tax breaks to large corporations and the top one percent,” Sanders said. “The situation has become so absurd that over a third of the largest and most profitable corporations in our country pay nothing in federal income taxes. Instead of cutting vital and popular programs like Social Security and Medicare, we need to repeal the Trump tax breaks for the rich and demand that the largest corporations in America finally start paying their fair share of taxes.”
It is true that the study found corporations paid far less in taxes as a percentage of their income in 2018 as compared to 2014. However, the report acknowledges that actual tax receipts from corporations increased, due to offshore money returning to the U.S. and increased taxation on foreign-earned income. From the report:
“While effective tax rates decreased in 2018, total tax liability among profitable large corporations was slightly higher in both 2017 ($278 billion) and 2018 ($267 billion) than it was in 2016 ($262 billion). TCJA [Trump’s Tax Cuts and Jobs Act] increased foreign-sourced income subject to tax in the U.S. and increased repatriations of income previously held offshore. However, TCJA often taxed this income at reduced rates. These changes may have contributed to a lower effective tax rate in 2018, but also generated tax liability from income that was previously not taxable under U.S. law.”
This should be viewed as a win-win (from a statist perspective). Companies earned more and are paying less to the government on a relative basis, but on an absolute basis, the government has increased its revenue. This was a tax strategy pushed by many Reagan/Friedman disciples in the 80s/90s — lower/simplify taxes to allow more productivity and less “hiding,” leaving both the public and private sectors better off.
Apparently Bernie is not reading the reports that he forced us to pay for… or he’s knowingly being deceptive. Either way, not someone who deserves more funding.
One troubling trend the study does reveal is that while more large (>$10 million in assets) corporations are 0% income tax, this is not the case for smaller ones — as shown by this graph:
So, the category of “all corporations” saw less companies paying nothing in income tax DESPITE the upward pressure from the large corporations included in that bucket. What is sure to make this trend continue? More complications to the tax code, which big firms with teams of lawyers are able to take advantage of, and Biden’s latest ”minimum corporate tax” is rife with exceptions.
To Bernie’s credit, he wants to do away with many loopholes (though probably not the climate-related ones). Instead he just wanted to tax your business at 35% if it makes over $75,000 per year. Then when you realize some of that income or give it to your employees, he’ll take some more.