Washington, D.C. – Congresswoman Madeleine Dean (PA-04) and U.S. Senator Elizabeth Warren (D-Mass.) wrote to the CEOs of Coca-Cola, PepsiCo, and General Mills, pressing their executives on the companies’ pattern of profiteering off consumers, both through “shrinkflation” and tax dodging.
All three of these companies have shrunk the size of their packaging to squeeze profits out of their customers — a practice known as “shrinkflation.” Then, Coca-Cola, PepsiCo, and General Mills paid a very slim federal income tax on their billions of dollars in profits made from price gouging. In other words, American families are paying more for less, while those same companies are paying less than their fair share in taxes.
“Shrinking the size of a product in order to gouge consumers on the price per ounce is not innovation, it is exploitation,” the lawmakers wrote. “Unfortunately, this price gouging is a widespread problem, with corporate profits driving over half of inflation.”
Reporting indicates that one of the key reasons that General Mills’ profits continue to grow is because they’ve shrunk some of their packaging. For example, the “Family Size” box of Cocoa Puffs went from 19.3 ounces to 18.1 ounces while charging the same price, at least initially. Similarly, PepsiCo replaced its 32 oz Gatorade bottle with a 28 oz bottle for the same price. And Coca-Cola has openly told its shareholders that it had “earn[ed] the right” to hike prices for consumers because of their company’s market power.
While these companies continue to profit off consumers, the companies are also turning around and paying less of those profits in taxes than the families they price gouge.
According to a recent report by the Institute for Taxation and Economic Policy, from 2018 to 2022, Coca-Cola made $13.4 billion but paid an average effective tax rate of just 13.5 percent, General Mills made $12 billion but paid an average effective tax rate of just 14.8 percent, and PepsiCo made $22.4 billion but paid an average effective tax rate of just 15 percent. These tax rates are even lower than the corporate tax rate that was reduced from 35 to 21 percent by former President Trump and Congressional Republicans in 2017.
“We strongly oppose these corporate tax giveaways, and have fought to pass tax increases on big corporations, including the 15 percent minimum tax on billion-dollar corporations,” the lawmakers wrote. “No corporation should pay a lower tax rate than working Americans – especially when that same corporation turns around and gouges consumers on the other end through shrinkflation.”
Rep. Madeleine Dean is a mother, grandmother, attorney, professor, former four-term member of the Pennsylvania House of Representatives, and U.S. Representative for the Fourth District of Pennsylvania.
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