Finance and economicsTax in AmericaA tale of two profitsA minimum tax on companies seems alluring, but is likely to disappointON THE FACE of things, it seems both absurd and unfair that large American companies regularly whittle down their tax bills, taking advantage of every loophole on offer.One study found that at least 55 big companies incurred no federal taxes at all on their profits in 2020.A proposal being discussed as The Economist went to press, and as the Democratic Party scrambled to fund its social-spending package, seems to offer a popular solution: a minimum tax on corporate earnings as reported to shareholders, rather than as massaged down when reported to tax collectors.The structure of the minimum tax looks simple enough.Companies that report more than $1bn in profits to shareholders would pay a tax of at least 15% on those profits.The levy would be explicitly aimed at firms such as Amazon, which had an effective federal income-tax rate of just 4.3% from 2018 to 2020, far below the statutory rate of 21%, according to the Institute on Taxation and Economic Policy, a left-leaning think-tank.All told, the new tax would apply to some 200 big companies.Politically, the minimum corporate tax has much going for it.
