WASHINGTON – From John Kennedy to Donald Trump, American presidents have taken aim at corporate America's tax-avoidance schemes before – and mostly missed.
Now President Joe Biden is training the government's sights again on the loopholes, shelters and international havens that have long allowed multinational companies to dodge taxes in ways that ordinary households cannot.
The idea is to help pay for Biden's trillions in proposed spending, and to shift more of the federal tax load onto companies and narrow America's vast income inequality.
In the early to mid-1950s, corporations accounted for 30% of federal tax collections. Last year, their share barely topped 7%.
As corporations have generated an ever-smaller share of federal tax revenue, the burden has fallen more heavily on individuals.
The president wants to stop companies from stashing profits in countries with low tax rates. To do so, he's proposed a 21% minimum tax on multinationals' foreign earnings and is urging other countries to follow suit. His plan would also rescind what the administration sees as international loopholes in Trump's 2017 tax legislation.
Many analysts see Biden's corporate tax plan as a game-changer.
If adopted, the 21% minimum global tax “effectively spells the end of the tax haven as we have come to know it,” said Alexander Arnon, an analyst at the nonpartisan Penn Wharton Budget Model, a research organization associated with the University of Pennsylvania.
Penn Wharton's analysts estimate that a 21% minimum global tax and other international provisions of Biden's tax plan would raise $987 billion from 2022 through 2031. They said Biden would collect an additional $892 billion from an increase in the overall corporate tax rate to 28% from 21%.
“It's a terrific plan,” said Matthew Gardner, senior fellow at the left-leaning Institute on Taxation and Economic Policy. “We cannot have a sustainable corporate tax system until we solve this problem of companies shifting their intangible assets around.”
Republicans and business groups are already lining up in opposition. The Business Roundtable, an association of CEOs, reported that 76% of the top executives it surveyed said the 21% minimum global tax would weaken their company's competitiveness and also could limit corporate investment and hiring.
The Chamber of Commerce's chief policy officer, Neil Bradley, said the Biden plan would “slow the economic recovery and make the U.S. less competitive globally.''
In the end, many analysts say they think that any agreement on a higher corporate tax rate could settle on around 25% – less than Biden would like but higher than the current rate.