Big Tech might be a little afraid of taxes. Specifically, a provision in the Inflation Reduction Act that would require corporations with more than $1 billion in annual profits to pay a minimum tax rate of 15%. That provision could be why Silicon Valley has largely stayed silent on the agreement reached by Sens. Joe Manchin and Chuck Schumer despite the bill containing nearly $370 billion in funding that would also help tech companies reach their climate goals.
Despite their lofty net zero commitments, no major tech companies outside of Salesforce have issued statements in support of the Inflation Reduction Act of 2022. Their silence says a lot.
In fact, trade associations that many tech giants are members of have come out with statements against the 15% tax provision. The Business Roundtable — a major lobbying group whose members include Tim Cook, Andy Jassy, Sundar Pichai, Satya Nadella, Marc Benioff and Ted Sarandos — issued a statement on Thursday saying that it “strongly opposes” legislation that would raise taxes and “discourage investment in the U.S.” Urging Congress to reject “harmful tax increases,” the association also conveniently and completely sidestepped any mention of climate change in its statement.
The U.S. Chamber of Commerce, whose many dues-paying members also include the tech industry, also issued a strongly worded statement opposing the budget reconciliation bill, arguing that it would “discourage investment and undermine economic growth and innovation.” The group didn’t mention the bill’s climate provisions. (Though its stance has since softened, the chamber also peddled climate denial for decades.)
“Companies are doing the calculation of, ‘OK, how does this 15% hit us?’” said Zach Friedman, the director of federal policy at Ceres, a climate nonprofit focused on market-based solutions. He pointed out a similar corporate income tax agreement in Europe that companies are already having to factor into their business and policy decisions. The U.S. is also one of 136 countries that agreed to a deal as part of the OECD to set a 15% minimum corporate tax rate last year.
“Companies are doing the calculation of, ‘OK, how does this 15% hit us?’”
With 49 Democratic senators ostensibly lined up to vote for the Inflation Reduction Act, the trade groups appear to be targeting the vote of Sen. Kyrsten Sinema. She has yet to say if she’ll vote on the bill, and while she has generally been supportive of climate legislation, she has taken the side of big business when it comes to taxes. Friedman said the bill was crafted in a way that is “largely responsive to Senator Sinema's concerns.” The corporate minimum tax rate part of the bill is also a key component to ensure that it can be passed via reconciliation, which would only require a simple majority for it to clear the Senate.
There’s “unequivocally” a divergence between tech companies’ public climate commitments and what they’re actually willing to give up to turn those commitments into actions, said Jamie Alexander, founding director of Drawdown Labs. Her group partners with the private sector on climate action.
Despite its membership in Business Roundtable, Google is also part of the Drawdown Labs consortium, which bans lobbying against climate change measures as a condition of membership. (Its partners have shown reticence to engage in relatively modest calls for climate action before.)
Alexander was “shocked” that the corporate tax provision made it into the 725-page Inflation Reduction Act. For most of the business community, the resounding consensus was “‘You need to take this out in order for us to support this,’” she said. “Companies are going to try to push back on this, which was my main fear when I saw that in there.”
Tech companies may, of course, still be advocating for the legislation behind closed doors. The anti-IRA rhetoric is “largely coming from trade associations themselves and not companies,” Friedman said, noting that there is “definitely some misalignment between companies and these trade associations.”
The anti-IRA rhetoric is “largely coming from trade associations themselves and not companies.”
Still, it’s clear that companies have their own platforms from which to urge Congress to pass climate legislation, taxes and all. Despite the fact that the measure would add more renewables to the grid, get more EVs on the road and accelerate investment in clean tech — all things Big Tech is hypothetically in favor of — the industry has stayed curiously silent on the climate deal.
A Meta rep told Protocol the company doesn’t have a comment at this time on the bill. Apple, Google, Microsoft, Amazon and Netflix did not respond to requests for comment for this piece nor did they offer comment last week after the bill was released.
When asked about the association’s stance on the Inflation Reduction Act’s climate provisions, a spokesperson for Business Roundtable wrote in an email to Protocol, “We are analyzing all aspects of the bill, and our positions on legislation are always based on the totality of what is included. We have spoken out on the tax proposals included in the bill and here is what we’ve said,” including the group’s statement against the provision.
“There’s no bigger threat to economic growth than climate change,” Alexander said. In her view, companies need to move beyond the potential tax hit and consider already-present climate threats to business as usual, from supply chain disruptions to lost working hours from wildfires and air pollution. She added that “requires a longer-term perspective” than quarterly earnings.