Dozens of progressive groups are urging Congress to oppose the inclusion of proposed extensions to Donald Trump’s corporate tax cuts in any year-end legislative package, saying that such tax cuts have already given undue favor to corporations and the wealthy and would only cause further harm if extended or made permanent.
In a letter led by Americans for Tax Fairness, the groups highlighted their strong opposition to several corporate tax breaks, passed by Republicans in 2017, that are set to expire in 2022 and 2023.
They called out the “overly generous” tax deduction that allows corporations to write off research and development expenses at once rather than over five years; increased net interest tax deductions, which allow corporations and private equity firms to deduct more of the cost of borrowing funds; and the 100 percent bonus depreciation policy that allows companies to reduce their taxable income.
These cuts, if made permanent, would cost the government about $600 billion in revenue, research has found. This would be on top of the $1.6 trillion in revenue that the Congressional Budget Office has estimated that the Trump tax cuts, which overwhelmingly benefited corporations and the wealthy, would cost over the first decade of their implementation; Trump’s own Treasury Department found that the tax package would cost the government $2.3 trillion over the first 10 years, given that certain cuts for estates and individuals would be extended past 2025.
Republicans have been pushing to extend these cuts and have made it a priority for the party as it is slated to take control of the House. Economists say that extending these cuts would only add to the federal deficit — which they often posture on when Democrats propose social spending — and worsen inflation.
Extending these cuts in a time when the working class is struggling and the economy stands on the precipice of recession, in part due to volatile conditions created by corporate profiteering, would be especially cruel when vital public programs are already facing cuts. The groups warned that corporate Congress members are not just seeking extensions of the tax breaks but are seeking to eventually make them permanent, which they could do in 2026 when some tax breaks expire and Republicans could have control of Congress.
“At a time when corporations are making record-high profits while paying record-low taxes as a share of the economy, and when corporate price gouging is helping to fuel inflation, corporations should start paying more of their fair share, not less,” wrote the group, which includes progressive organizations like the Institute for Policy Studies and several labor unions.
“Working families need the revenue that fairer corporate taxes would generate to lower the costs of household essentials. Greater corporate tax revenue can help lower the cost families pay for healthcare, education, housing and other vital services; strengthen Social Security and Medicare, which have been threatened with cuts; and fund other useful public services,” the groups continued. They pointed out that polls have shown that corporate tax cuts are extremely unpopular with the public.
The Trump tax cuts have been disastrous for tax enforcement and revenue raising. They paved the way for dozens of major corporations to pay $0 in federal corporate income taxes in 2020 and beyond, in many cases despite making billions of dollars in income. This is likely why major corporations like Amazon, Ford, Intel, Microsoft and Northrop Grumman are lobbying for the extension, as successfully pushing through such proposals would quite literally pay off for them.
Although the cuts have been ruinous for the economy and government revenue, Democrats have done little to repeal or address the tax cuts, despite having had control of Congress over the past two years. This is in part due to corporate allies in the party like Senators Joe Manchin (D-West Virginia) and Kyrsten Sinema (D-Arizona) and Representatives Kurt Schrader (D-Oregon) and Josh Gottheimer (D-New Jersey), who have rallied for corporate tax cuts as Democrats have attempted to raise taxes on corporations.