Last month, Sena. Mark Warner released “Overhauling International Taxation,” a framework for ensuring huge corporations pay their fair share so that we can invest in jobs, health care and other critical programs and services.
The plan, proposed by Warner as well as Sen. Wyden of Oregon and Sen. Brown of Ohio, builds on President Biden’s Made in America Tax Plan, which rewards corporations for keeping jobs in the United States and invests in building a prosperous economy financed by a fairer tax code.
The Warner plan rolls back the 2017 Trump tax law’s provisions that created new incentives to ship jobs overseas and enable corporations to avoid paying their fair share of taxes on offshore profits.
The Trump law is a massive giveaway to big corporations, was crafted behind closed doors, and rushed through Congress.
Ultimately, Trump’s Tax Cuts and Jobs Act (TJCA) gave $1.9 trillion in tax breaks mainly to the rich and corporations while cutting health care and other critical services.
Community members like me haven’t seen the benefits of those changes; instead, we have watched the rich get richer while we struggle through a pandemic.
Senator Warner’s proposal is in line with President Biden’s plan, which calls for domestic tax increases on corporations from 21 percent to 28 percent, closing corporate tax loopholes, and increasing international corporate taxes to be more consistent with what corporations pay in the United States.
“The international tax system should focus on rewarding companies that invest in the U.S. and its workers, stop incentivizing corporations to shift jobs and investment abroad, and ensure that big corporations are paying their fair share,” the nine-page framework says.
At Virginia Organizing, we have a long history of working to make health care more affordable and accessible in the Commonwealth. We have made so much progress in this fight. The Affordable Care Act stopped health insurance companies from denying people coverage due to pre-existing conditions, expanded Medicaid to cover millions of working families, allowed young people to stay on their parents’ health insurance longer, and so much more. The American Rescue Plan provides even more subsidies for people to afford health insurance on the ACA marketplace. Virginia just recently expanded prenatal coverage to more people, regardless of immigration status. These changes have made a real difference in people lives, including my own.
The next step in our health care reform journey must address the unconscionably high prices of prescription drugs. Tax reform that holds prescription drug corporations accountable is an important piece of this puzzle.
Huge prescription drug corporations have had a free ride for too long. They use publicly funded research to develop new products, gouge consumers on the medicine we need to stay alive, and then turn around and dodge taxes every way they can.
Sen. Warner’s framework provides an important tool to help hold these corporations accountable: the Global Intangible Low-taxed Income (GILTI) System. While it’s definitely an obscure part of the tax code, changes to this system would affect patents and intellectual property, a significant source of revenue to prescription drug corporations.
In the 2017 tax law, Trump set the GILTI rate at just half of the U.S. corporate tax rate, creating an incentive for corporations to earn income overseas and dodge U.S. taxes. President Biden has proposed increasing that rate to 75 percent. But Sen. Warner went further, floating the possibility of increasing it to match the tax rate companies pay in the U.S.
We wholeheartedly support Sen. Warner’s recommendation. With his leadership, Congress can create a new tax system that prioritizes investments in jobs, education, and health care over unnecessary tax cuts for some of the world’s most profitable corporations.
Ebony B. Guy is a leader in the Danville Chapter of Virginia Organizing and a member of Virginia Organizing’s State Governing Board.