A Modest Change To The Coronavirus Stimulus

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Many Americans are understandably outraged that corporations are being awarded $500 billion directly plus up to four trillion more in backchannel funding in the coronavirus stimulus plan. As a way to improve the bill and protect the American people, the U.S. Senate (aka "we work for them, not you") should add my modest change to the bailout plan.

The concept is simple and requires just a one line addition: Any corporation receiving a government loan or loan guarantee must have paid Federal income tax in 2018.

How would this work out for some of our favorite corporations? None of the following would be eligible for assistance because they all paid no tax but instead received refunds. And there are many other corporations that paid $0 or got refunds.

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Some Background

On October 15, 2018, the Department of the Treasury released its tally of budget totals for fiscal year 2018. In that report, they showed that corporate income tax receipts fell from $297 billion in 2017 to $205 billion in fiscal year 2018 — a 31 percent drop. Such a large year-over-year drop in corporate income tax revenue is unprecedented during a time of economic growth.

The 31 percent drop in corporate income tax receipts last year is the second largest since at least 1934, which is the first year for which data are available. Only the 55 percent decline from 2008 to 2009 was larger. While that decrease can be explained by the Great Recession, the drop from 2017 to 2018 can be explained by tax policy decisions.

The Tax Cuts and Jobs Act, enacted in December 2017, is responsible for the plunge in corporate income tax receipts in 2018. Those changes include a reduction in the statutory rate from 35 percent to 21 percent and the expanded ability to immediately deduct the full value of equipment purchases.

Source: Corporate Tax Receipts Took an Unprecedented Drop This Year

Tax receipts from corporations ticked up in FY 2019 to $230 billion from the previous year's $205 billion, largely due to repatriated foreign corporate earnings and timing shifts driven by the 2017 tax act.

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Comments

travelerxxx's picture

Any corporation receiving a government loan or loan guarantee must have paid Federal income tax in 2018.

This should be the criteria for any federal loan or loan guarantee at any time, not just now.

But, yes, especially now.

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Pluto's Republic's picture

In Mexico, Covid=19 is being called

"The disease of the rich."

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Human salvation lies in the hands of the creatively maladjusted.

— Martin Luther King

edg's picture

@Pluto's Republic

I doubt many of the infected people in either China or Italy are rich.

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Pluto's Republic's picture

@edg

...but it was actually Rio — which makes more sense. It refers to rich jet-setters who brought the disease to Brazil.

Gangs call curfews as coronavirus hits Rio favelas

RIO DE JANEIRO (Reuters) - Gangs and militias have imposed strict curfews. Coronavirus is coming, and Rio de Janeiro’s lawless favelas are gearing up for the onslaught.

The gangs’ concern over the outbreak echoes fears nationwide about the fate of Brazil’s nearly 15 million favela residents confronting what some have dubbed “the disease of the rich.”

The coronavirus landed in the country with wealthier Brazilians returning from Europe, but is quickly migrating into poorer communities, where crowded quarters, informal labor and weak public services threaten to accelerate its spread....

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1 user has voted.

Human salvation lies in the hands of the creatively maladjusted.

— Martin Luther King

Alligator Ed's picture

Methinks you doth protest too much. Do you not understand the underpinnings of our great nation? A brief, pictorial illustration of this, as applied to current repudiation of capitalists, robber barons, and other sleaze balls is included (there are more, so if this needs reinforcement, more will be provided).

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