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Senator Warren proposes new tax for large U.S. firms

Christian Fernsby |
Senator Elizabeth Warren proposed Thursday a new tax for the country's big companies, some of which make multimillion-dollar profits without paying federal taxes on those benefits.

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In a text released Thursday, the Massachusetts legislator referred to the cases of the online sales giant Amazon, which reported profits of 10 billion dollars; and the multinational Occidental Petroleum, with profits of four thousand 100 million, since neither of the two firms paid federal tax on those results.

Warren explained that this is because while companies follow certain financial rules to calculate the value of the profits they report to shareholders and the public, they comply with a different set of tax accounting rules to calculate the 'profits' they report to the Internal Revenue Service.

Because of relentless lobbying, our rules on the issue are filled with so many loopholes, exemptions and deductions that even companies that tell shareholders they've made more than a billion dollars in profits can end up paying no taxes on those profits, he denounced.

That's why I'm proposing a great new idea: the Real Corporate Income Tax,' said Warren, who said that the tax would apply to the profits that big firms report to their investors.

According to the legislator's plan, who will seek to win the crowded Democratic primary, this new tax would only apply to companies that report more than 100 million in profits (last year were about 1,200).

Such a levy would not be used on the first 100 million, but for every dollar of profit above that figure, corporations will have to pay seven percent, which will add to the payments of tax liabilities to which they are subject under current rules.

That means Amazon would pay 698 million dollars and Occidental Petroleum would pay 280 million dollars in taxes, instead of paying zero, the senator said.

Warren quoted an estimate by economists Emmanuel Saez and Gabriel Zucman, of the University of California-Berkeley, who calculated that the tax will generate a revenue of one trillion dollars over the next 10 years.

Several media considered that the proposal is designed to address public outrage over tax benefits offered to corporations like Amazon, which withdrew from a plan to build a new headquarters in New York City amid criticism of incentives offered by state and local politicians.

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