A Fair Income Tax on the Trillion-dollar Behemoths
171 Tax Notes Federal 1199
12 Pages Posted: 8 Jul 2021
Date Written: May 24, 2021
Abstract
Our trillion-dollar market capitalization behemoths, Apple, Amazon, Google and Microsoft, pay effective tax rates of between 0.65 percent and 2.9 percent because they deduct immediately ("expense") their intangible investments that have value beyond the end of the year. Current regulations allow expensing of investments that cannot be sold or seized apart from the business as a whole, but they also permit mandatory capitalization of expenditures with value beyond the tax year upon publication in the Federal Register. Treating the investments as creating basis, not expensing, and correcting prior year's error of allowing expensing of costs with continuing value would raise $6 trillion revenue, under income tax norms, without the participation of Congress.
Keywords: Capitalization of intangible investments; $6 trillion revenue
JEL Classification: K34,H25,h26
Suggested Citation: Suggested Citation