Investors largely expected the FOMC to cut rates by a quarter point.The Fedread more
The lack of clarity surrounding the U.S.-China trade war is what's really hitting global growth, says ex- Deputy Treasury Secretary Sarah Bloom Raskin.World Economyread more
China's economy has long relied on factors such high levels of investments and an expanding labor force for growth. Those growth drivers are running out of steam.China Economyread more
India could benefit from the fallout in the U.S.-China trade war, experts told CNBC — but much-needed reforms on land and labor could prove to be a challenge for companies...Asia Economyread more
New crash tests show the Tesla Model 3 and the Audi e-tron, are among the safest models out on the road. The results bolster the theory electric vehicles may be better...Autosread more
U.S. consumers and growth in sectors such as technology have offset declines in other American industries, says Tom Finke, chairman and CEO of investment management firm...US Economyread more
The FAA administrator's comments come on the eve of his visit to Boeing facilities outside Seattle. While there, he's scheduled to meet with Boeing executives and be briefed...Airlinesread more
Last weekend's attacks on oil facilities — and the spike in crude prices that followed — should show that the world needs to stop relying on oil, says Helen Clark.Energyread more
The photo depicts Canadian leader Justin Trudeau wearing a turban and robe, with dark makeup on his hands, face and neck. Liberal Party spokesman confirms the photo is of...Electionsread more
As the Fed was meeting to consider cutting interest rates, it lost control of the very benchmark rate that it manages.Market Insiderread more
CBS, CNN and other major media companies are starting to pull e-cigarette advertising off their airways, as the death toll from a mysterious vaping-related illness continues...Health and Scienceread more
WASHINGTON – Amazon and Joe Biden are in a Twitter spat, and it perfectly captures the controversy over America's new tax code.
The beef began when the frontrunner for the Democratic presidential nomination called out the online giant on Twitter.
"I have nothing against Amazon, but no company pulling in billions of dollars of profits should pay a lower tax rate than firefighters and teachers," Biden wrote Thursday morning. "We need to reward work, not just wealth."
Amazon fired back at the end of the day, redirecting the candidate's aim.
"We've paid $2.6B in corporate taxes since 2016. We pay every penny we owe. Congress designed tax laws to encourage companies to reinvest in the American economy," the company wrote on its Amazon News Twitter account. "We have. $200B in investments since 2011 & 300K US jobs. Assume VP Biden's complaint is w/ the tax code, not Amazon."
Biden's tweet linked to a New York Times story that cited data from the left-leaning Institute on Taxation and Economic Policy on companies that earned billions of dollars last year but paid no federal taxes. The analysis showed that Amazon topped the list, with pretax profits of nearly $11 billion. In fact, the group found the company actually enjoyed a negative tax rate of 1.2 percent, thanks to a $129 million income tax rebate.
This was not the result Republicans were going for when they drove the overhaul of the tax code through Congress two years ago with party-line votes in both chambers. The legislation, which President Donald Trump signed into law in late 2017, lowered the corporate tax rate from 35% to 21% and allowed companies to immediately expense their capital investments.
On the flip side, the new law offset some of the cost of those cuts by requiring companies to pay taxes on overseas earnings, a move intended to incentivize investing in America instead.
Republicans touted the tax cut as fuel for a new era of prolonged economic growth that would eventually cover the cost of not only the corporate rate cuts, but also steep reductions in individual tax rates.
That scenario has yet to materialize. GDP has surpassed projections by continuing to grow at a 3% rate. But it has come at a price: ballooning deficits and dwindling corporate tax revenue.
The Congressional Budget Office estimates the deficit to be $738 billion so far this fiscal year, up nearly 39% from the same period last year. Corporate tax receipts were down $11 billion, or nearly 9%.
"Well that's what happens when you cut the rate by 40%," said William Gale, co-director of the nonpartisan Urban-Brookings Tax Policy Center. "You would need heroic growth to make up the difference."
But the pace of decline has been taken even the experts by surprise. As recently as January, the CBO had projected that corporate tax revenue would rebound this year, as some of the immediate benefits of the new law wore off.
Instead, the opposite has occurred, and no one is really sure why.
"Corporate revenue has fallen off a cliff faster than I think anyone has anticipated," said Seth Hanlon, senior fellow at the Center for American Progress and a former adviser to President Barack Obama.
Perhaps it's because companies have not repatriated their overseas profits as quickly as forecast. Maybe tariffs are reducing corporate income and thereby lowering corporate tax receipts. (Side note: Revenue from customs duties are up more than 80 percent this year to nearly $45 billion.)
No matter the reason, the numbers add up to a giant headache for Republicans and a guarantee that cases like Amazon will remain political punching bags well into the 2020 election.
Correction: This story was updated to reflect correct deficit and corporate tax receipt data for the fiscal year.