Many new tax laws will go into effect as early as January 1, 2022. Democrats at the state and federal level plan to increase taxes on corporations to pay for their proposals — some of which have already been passed into law, some of which seem dead on arrival in the Senate or House of Representatives.
Representative Mary Keefe (D-Worcester) wants to hike the corporate tax rate to 9.5 percent, which was its pre-pandemic level. Estimates say the law would lead to up to half a billion in revenue each year. These propositions were made after corporate America made record profits even as most Americans struggled to pay rent.
Keefe said, “During the pandemic, 17 out of America’s top 25 corporations have made extraordinary profits and distributed 99% of their net profits to their wealthy shareholders, who are overwhelmingly white, male and among the wealthiest 10% of Americans.”
Unsurprisingly, studies have shown the vast majority of benefit from the 2017 Jobs and Tax Cut Act went to the nation’s wealthiest individuals and corporations.
Not sure if the new tax laws will affect you or your business? Visit Seder Law for more information or speak to a representative. Keefe wasn’t the only state representative with new ideas.
Representative Mike Connolly (D-Cambridge) wants to impose a law establishing a tax based on a corporation’s profits. The tiered system would levy a tax of $456 to $150,000 annually.
Yet another proposal wants to tax the often untaxable profits that corporate empires hide away overseas.
Opponents of these measures have all sung the same song in unison: “The new measures would hurt businesses.” The evidence of such is lacking, though. Governor Charlie Baker is still against new taxes on businesses.
State Director Chris Carlozzi of the Massachusetts chapter of the National Federation of Independent Businesses said, “The idea of piling on new taxes at a time when businesses are trying desperately to recover would be folly. For lawmakers to say that the state needs more tax revenue from businesses at a time when billions of dollars in pandemic relief has come into the state is disingenuous.”
Instead he and other Republicans and special interests groups prefer to cut taxes for corporations even more. Carlozzi said, “This would give the state a competitive edge by doing away with what many businesses feel is an unfair tax.”
The problem with these opposition statements is obvious: the new taxes would only target the richest earners, which are the ones who rarely pay a dime in taxes anyway. Why should only the poor have to pay taxes?
Connolly said, “As we know, corporations avoid paying taxes by employing a variety of accounting techniques and taking advantage of certain provisions in the law.”
Federal lawmakers are still pushing the Build Back Better bill, but efforts to push it through Congress have stalled in large part due to one Senator, Joe Manchin, who believes in a more conservative approach and wants to avoid hurting West Virginia’s already ailing coal industry (even though those jobs are destined to disappear anyway).