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Former Vice President and current presidential candidate, Joe Biden, will speak at a campaign stop at IBEW Local 490 in Concord, NH, on June 4, 2019.
Matthew J. Lee | The globe of Boston | Getty Images
WASHINGTON – Amazon and Joe Biden are spitting on Twitter, which perfectly captures the controversy surrounding the new US tax code.
The beef began when the favorite for the Democratic presidential nomination called the giant online on Twitter.
"I have nothing against Amazon, but no company making billions of dollars in profit should pay a lower tax rate than firefighters and teachers," wrote Biden Thursday morning. "We must reward work, not just wealth."
Amazon fought back at the end of the day, reorienting the candidate's goal.
"We are paying $ 2.6 billion in corporate taxes since 2016. We pay every penny we owe." The tax laws designed by Congress encourage businesses to reinvest in the US economy, writes the company on his Twitter account Amazon News. "We've invested $ 200 billion since 2011 and 300,000 US jobs, so let's say VP Biden's complaint is about the tax code, not Amazon."
Biden's tweet was linked to a New York Times article citing data from the Institute of Taxation and Economic Policy left, on companies that had won billions of dollars last year without paying for it. Federal taxes. The analysis showed that Amazon figured at the top of the list with pre-tax profits of nearly $ 11 billion. In fact, the group found that the company enjoyed a negative tax rate of 1.2%, thanks to a repayment of $ 129 million.
This was not the result sought by the Republicans when it imposed on Congress the redesign of the tax code two years ago, with political party votes in both houses. The legislation, which President Donald Trump promulgated in late 2017, lowered the corporate tax rate from 35% to 21% and allowed companies to immediately write off their capital investments.
On the other hand, the new law has offset part of the cost of these cuts by forcing companies to pay taxes on their profits abroad, a move to encourage investment in the United States instead. .
Republicans have introduced the tax cut as a fuel for a new era of prolonged economic growth that would eventually cover the cost of corporate rate cuts, but also significant reductions in personal tax rates.
This scenario has yet to materialize. GDP exceeded expectations by continuing to grow at a rate of 3%. But that comes at a price: ballooning deficits and declining tax revenues.
The Congressional Budget Office estimates the deficit at $ 693 million this fiscal year, up 16% from the same period last year. Corporate tax revenues decreased by $ 11 billion, or by almost 15%.
"Well, that's what happens when you reduce the rate by 40%," said William Gale, co-director of the nonpartisan Tax Policy Center of Urban-Brookings. "You would need a heroic growth to make a difference."
But the pace of decline has been taken even by the experts. As recently as January, the OBC had expected corporate tax revenues to rebound this year, as some of the immediate benefits of the new law disappear.
On the contrary, the opposite has happened and no one really knows why.
"Corporate revenue has fallen faster than expected," said Seth Hanlon, senior fellow of the Center for American Progress and former adviser to President Barack Obama.
It may be because companies have not repatriated their profits abroad as quickly as expected. Maybe tariffs reduce business revenues and hence their tax revenues. (Note: Customs duty revenues have increased by more than 80% this year to nearly $ 45 billion.)
Whatever the reason, the numbers represent a huge headache for Republicans and a guarantee that cases like Amazon will remain political until the end of the 2020 elections.
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