It’s been dubbed the “Amazon tax,” a proposal floated by President Joe Biden to impose a minimum tax rate of 15% on corporations with $100 million in profits that pay little or no income tax. It could present more of a challenge than Biden’s other tax plans, says one Washington policy analyst.
“Some of these corporations who have done a good job of avoiding anywhere close to the statutory rate could see a very different tax structure if what is proposed gets implemented,” said Ed Mills, managing director and Washington policy analyst at Raymond James.
The plan also includes a proposal to raise the overall statutory tax rate to 28% from 21%, but “I don’t think there’s a lot of folks that will lose a lot of sleep about how that could impact earnings,” Mills told Yahoo Finance Live.
While the bill might end up allowing Amazon and other companies to reduce that 15% rate to some extent, "it seems very likely that Biden's plan would turn Amazon into a taxpayer. Equally clear that the company would still be paying far less than the 21% statutory corporate tax rate," said Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy.
Economists on both sides of the aisle have been critical of Biden’s proposal, though, in part because it adds a layer of complexity to an already labyrinthine tax code.
Mills said Democrats’ strategy in getting it passed would be messaging around fairness, and using proceeds from the tax to improve worker treatment, for example with paid sick leave or a child tax credit. They’ll say, “This isn’t punitive, this is the ‘fair’ way of doing things,” he said.
To be sure, tax proposals aren’t on the docket imminently, but it’s a potential profit risk “on the horizon,” Mills said.
CORRECTION: An earlier version of this story attributed the comment that Amazon would likely pay “far less than the 21% statutory corporate tax rate” to an Amazon spokesperson. This comment was provided by Matt Gardner of the Institute on Taxation and Economic Policy.
Julie Hyman is the co-anchor of Yahoo Finance Live, weekdays 9am-11am ET.