Levin's call for a higher corporate tax rate was influenced in large part by a coalition of business leaders that consists of the American Sustainable Business Council, Business for Shared Prosperity, and the Main Street Alliance, a small-business group. The coalition worries that the White House and Congress will end up passing a fiscal cliff deal that would fail to force big companies to pay their fair share:Sen. Carl Levin (D-Mich.) pushed Friday for including tens of billions of dollars in additional revenues from corporations into any year-end tax-and-spending deal.
Big-name corporations are pressing lobbying Washington to find a way to avert looming tax increases and spending cuts, and to get the country’s deficit on a more sustainable path.
But Levin, who has long crusaded against corporate use of offshore tax tactics, said revenues from those corporations are a must, given that policymakers are also considering cuts to national security, education and entitlements. - The Hill, 12/14/12
“Our nation cannot afford ‘revenue neutral’ corporate tax reform that leaves corporate taxes as a share of our economy at historically low levels,” a coalition of business leaders wrote in a letter to Congress and the White house, calling for legislators to reject a fiscal cliff compromise “that would lock in today’s historically low levels of corporate tax receipts.” - Washington Post, 12/14/12And Senator Levin has heard this coalition loud and clear:
Levin believes that by closing tax loopholes like offshore tax havens could generate tens of billions of dollars a year. With these loopholes, it's no wonder why corporate profits are at an all time high:The advocates have attracted the support of Democratic legislators like Sen. Carl Levin, who argues that corporations, too, should be contributing net revenue to deficit reduction, rather than just finding savings through entitlement programs and the small businesses who pay their taxes through the individual tax code. Levin estimates that “tens of billions of dollars a year” could be raised by closing tax loopholes like offshore tax havens. “I would hope that these revenues which are so critically important to a deficit reduction package are being considered,” he said. - Washington Post, 12/14/12
Corporate tax revenue is currently below its historic average, even though corporate profits are at an all-time high. The corporate income tax used to track reasonably well with the rise and fall of corporate profits, but has become decoupled in the last few decades due to the proliferation of credits, deductions, and loopholes, and the growing use of offshore tax havens, as this chart shows:Senator Levin has stated that these ridiculously low corporate tax rates are harmful to all of us:
Last year, the effective tax rate paid by American corporations fell to 12.1 percent, a forty-year low. - Think Progress, 12/14/12
Levin has stated that he would like the elimination of corporate tax breaks to be an immediate revenue-raiser in a deal. He also stated that he would accept a commitment to end those incentives be part of a broader, long-term deal.“It is very unfair to the American taxpayer, it robs the U.S. Treasury of needed revenues, it’s unfair to any competitors who don’t use these offshore gimmicks and these corporate loopholes,” Levin said. It’s time, he said, to return corporate taxes to historical levels. - National Journal, 12/14/12
President Obama has proposed corporate tax reform as part of a potential year-end deal. However, the President's proposal differs from Senator Levin's. President Obama agrees that closing tax loopholes would would raise over $250 billion in 10 years while reducing the corporate tax rate from 35% to 28%. Some analysts claim that President's plan is revenue-neutral:
Levin strongly opposes the U.S. adopts a territorial tax system that would shield offshore corporate profits from American taxation. Levin also believes that the Senate and President Obama are against such a plan as but will continue to push his colleague to oppose such a plan:“This would not be the revenue-raising part of the negotiation. Corporate tax reform as the White House conceives it is revenue-neutral — and it’s not easy to get to revenue neutrality, figuring out which tax expenditures to end,” says Jared Bernstein, former economic adviser to Vice-President Joe Biden. - Washington Post, 12/14/12
Well said, Senator. I too plan to make sure President Obama and the Democrats make higher tax rates on corporations part of this deal. I have no problem going over the fiscal cliff but if we are going to reach a deal, it should not include cuts to Social Security, Medicare and Medicaid but should include raising taxes on corporations, the top 2% and eliminating corporate tax loopholes.“Those efforts need to be constantly guarded against,” Levin told reporters on a conference call. “We have to keep our guard up.”
It is “critically important,” Levin said, to “keep the president’s eye on the ball.” - The Hill, 12/14/12
Contact your Senator and urge them to support closing corporate tax loopholes and raising the corporate tax rate:
And contact President Obama and demand the same thing: