An analysis by the Center for American Progress Action Fund (CAPAF) reveals that former President Donald Trump’s proposed tax cut for corporations would exceed the federal budget for K-12 education. The proposed reduction in the corporate tax rate from 21% to 15% would result in massive tax savings for the largest U.S. companies, benefiting wealthy shareholders while neglecting workers and public investments.
During his first year in office, Trump signed a tax measure that slashed the corporate rate from 35% to 21%, resulting in huge gains for wealthy individuals and corporations. This year, as Trump prepared to meet with top corporate CEOs, he proposed an even deeper cut to 15%. The CAPAF analysis shows that this proposal would give the largest 100 U.S. companies an annual tax cut of $48 billion. These companies, including tech giants like Microsoft, Apple, and Alphabet, collectively reported $1.1 trillion in profits in their most recent annual reports.
The analysis found that the 10 largest U.S. companies, including JPMorgan Chase, which would benefit significantly from the tax cuts, would receive a total annual tax cut of $23.3 billion. This nearly $25 billion in annual tax cuts for just 10 corporations is more than double what the federal government spends on cancer and Alzheimer’s research combined.
For tech behemoths like Microsoft, Alphabet, and Apple, the tax savings would be substantial. Microsoft alone would receive an estimated $4 billion tax cut, while Alphabet and Apple would get $3.5 billion and $2.7 billion, respectively. The oil sector, which includes Exxon Mobil and Chevron, would see an annual total estimated tax cut of $2.5 billion. Pharmaceutical giants like Johnson & Johnson, Merck, and Pfizer would benefit from an annual total estimated tax cut of $3.1 billion. Financial institutions such as JPMorgan Chase, Bank of America, and Citigroup would collectively receive $4.1 billion in tax cuts annually. Retail giants like Kroger, Costco, and Walmart would see nearly $1.7 billion in annual tax savings.
These tax cuts for corporations come at a time when the federal budget for K-12 education is significantly lower. The proposed tax cuts exceed the entire FY 2024 U.S. Department of Education K-12 budget, highlighting the disparity in funding priorities. Additionally, the nearly $25 billion in annual tax cuts for the top 10 corporations is more than double the federal spending on critical medical research for cancer and Alzheimer’s disease.
The economic and social implications of these tax cuts are significant. The tax cuts favor wealthy shareholders and executives over ordinary workers. Historical context shows that previous tax cuts led to a surge in stock buybacks rather than increases in worker wages or investments in business-related projects. This practice exacerbates wealth disparity and neglects public investments in essential services.
The political context surrounding the proposal is marked by strong Republican support and Democratic opposition. Congressional Republicans are eager to pursue another round of tax giveaways should they win control of the Senate and the White House in November. Conversely, Democrats and progressive groups criticize the inequity of the proposal and its impact on public services. Corporate lobbying plays a significant role in shaping tax policies, influencing the push for further tax cuts for corporations and the wealthy.
President Joe Biden offers a contrasting proposal, aiming to raise the corporate tax rate to 28%. This increase would raise $1.1 trillion over 10 years, helping to fund public investments and reduce the deficit. Progressive tax reforms suggest more equitable policies that target the ultra-wealthy and corporations, ensuring a fairer distribution of tax burdens.
Public opinion and advocacy reflect widespread criticism of the proposed tax cuts. Economic policy experts, such as Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies, express outrage that corporations funneled their tax windfalls into stock buybacks rather than worker wages or innovation. Public sentiment also leans towards prioritizing funding for public
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