Warren proposes new $1T tax on profits of big companies such as Amazon

The new proposal Warren pitched Thursday would tax companies that earn over $100 million per year, which she estimates to number about 1200 currently.

“That first $100 million is left alone, but for every dollar of profit above $100 million, the corporation will pay a 7% tax,” wrote Warren in a post published by her campaign outlining the proposal. That tax would be paid in addition to a company’s current corporate tax liability.

The 2017 tax overhaul passed by Republicans lowered the nominal corporate tax rate to 21%, but some companies pay lower effective tax rates through utilizing various tax breaks. The Massachusetts Democrat argues that her plan will make it harder for companies to pay less in taxes than raising the corporate tax rate because it relies on the reporting of profits, which companies want to show investors in order to keep their existing funders happy or to attract new ones.

Warren specifically targeted Amazon in her announcement, claiming the online retailer paid nothing in corporate taxes last year.

“Look, you could raise the corporate tax rate, but Amazon would still pay zero,” said Warren. “I think that we do need to do corporate tax reform, and close up a lot of the loopholes and we need to change the corporate tax rate, but we have a problem just right in front of us.”

Warren estimates that this new tax would bring the federal government an additional $1 trillion over 10 years.

In an emailed statement, Amazon spokeswoman Maxine Tagay pushed back on Warren’s assertion that the company did not pay taxes.

“Amazon pays all the taxes we are required to pay in the U.S. and every country where we operate, including paying $2.6 billion in corporate tax and reporting $3.4 billion in tax expense over the last three years,” wrote Tagay. “Corporate tax is based on profits, not revenues, and our profits remain modest given retail is a highly competitive, low-margin business and our continued heavy investment.”

Warren told MSNBC that the corporate tax would help pay for other planks in her campaign platform.

“We do something like the corporate tax that I’ve just proposed … or the wealth tax that I’ve talked about and we have plenty of money to provide universal child care, universal pre-[kindergarten], universal pre-pre-K, to make the investment in all of our babies age zero to five and still have trillions of dollars left over,” Warren said.

Nicole Kaeding, vice president of federal and special projects at the right-leaning policy economic think tank the Tax Foundation, criticized the idea of a profit surtax as “problematic” and “piecemeal.”

“She’s obviously laying out ideas to pay for her policies,” said Kaeding.

For her part, Warren argues she’s aiming her policies at tackling income and wealth inequality. Earlier this year she proposed a 2% tax on the assets of individuals worth more than $50 million, and a 3% tax on individuals worth more than $1 billion. According to an analysis by economist Emmanuel Saez, who coordinated with Warren’s campaign on the proposal, that tax alone would raise $2.75 trillion over 10 years, though there are questions as to whether it might be unconstitutional.

“Inequality is going to break this country. We can’t sustain a democracy, we cannot sustain an America of opportunity, with growing inequality,” Warren said on MSNBC. “And we’ve got to have some great ideas, big ideas to push back against it.”

However, Warren distanced herself from the socialist label embraced by one of her presidential primary campaign competitors, Sen. Bernie Sanders, I-Vt., as well as by high-profile freshman Rep. Alexandria Ocasio-Cortez, D-N.Y.

“I believe in markets and I want to see markets work,” Warren said. “But understand this, markets without rules are theft.”