Corporate Taxes Are Wealth Taxes
By: David Leonhardt (The New York Times)
Gee! I thought taxing the rich would actually impose taxes on the rich. You know, things like taxing capital gains as ordinary income and making the income tax progressive.
Instead we're treated to New York liberal hokum-smokum about corporate taxes as share of GDP in the glorious 1950's. Let's just ignore that high corporate taxes drove corporations and jobs out of the country during the 1970's, 1980's, and 1990's. Let's just ignore the large and growing trade deficits of the United States.
If these New York liberals want corporate taxes to return the 1950's share of GDP then we'll need to return to being an exporting nation instead of an importing nation. We'll need much higher tariffs, not higher corporate taxes. Or, I suppose, we could simply nuke China. Destroying the world's manufacturing capacity in 1940's did make the United States the leader in exports.
In today's import dependent, consumer driven economy corporate taxes will only be a tax on workers and a tax on consumers. The United States dependence on imports is why the rich have become richer. The United States becoming a consumer economy without jobs to provide the money to consume is why the rich have become richer.
Don't be fooled by the charts and graphs. New York liberals created this mess. Now those New York liberals are lying their asses off to cover Joe Biden's ass.
Joe Biden's demand to raise corporate taxes is really about protecting the super rich and shifting the tax burden onto workers and consumers.
S E E D E D C O N T E N T
The main cause of the radical decline in tax rates for very wealthy Americans over the past 75 years isn't the one that many people would guess. It's not about lower income taxes (though they certainly play a role), and it's not about lower estate taxes (though they matter too).
The biggest tax boon for the wealthy has been the sharp fall in the corporate tax rate.
In the 1950s, '60s and '70s, many corporations paid about half of their profits to the federal government. The money helped pay for the U.S. military and for investments in roads, bridges, schools, scientific research and more. "A dirty little secret," Richard Clarida, an economist who's now the vice chairman of the Federal Reserve, once said, "is that the corporate income tax used to raise a fair amount of revenue."
ImageCredit...By The New York Times | Source: Federal Reserve Bank of St. Louis
Since the mid-20th century, however, politicians of both political parties have supported cuts in the corporate-tax rate, often under intense lobbying from corporate America. The cuts have been so large — including in President Donald Trump's 2017 tax overhaul — that at least 55 big companies paid zero federal income taxes last year, according to the Institute on Taxation and Economic Policy. Among them: Archer-Daniels-Midland, Booz Allen Hamilton, FedEx, HP, Interpublic, Nike and Xcel Energy.
"Right now, the U.S. raises less corporate tax revenue as a share of economic output than almost all other advanced economies," Alan Rappeport and Jim Tankersley of The Times write.
The justification for the tax cuts has often been that the economy as a whole will benefit — that lower corporate taxes would lead to company expansions, more jobs and higher incomes. But it hasn't worked out that way. Instead, economic growth has been mediocre since the 1970s. And incomes have grown even more slowly than the economy for every group except the wealthy.
ImageCredit...By The New York Times | Sources: Gabriel Zucman; Federal Reserve Bank of St. Louis
The American economy turns out not to function very well when tax rates on the rich are low and inequality is high.
Corporate taxes are wealth taxes
Corporate taxes are such an important part of the overall taxes paid by the wealthy because much of their holdings tend to be stocks. And as the owners of companies, they are effectively paying corporate taxes. Most of their income doesn't come through a salary or bonus; it comes from the returns on their wealth.
"In effect, the only sizable tax for these billionaires is the corporate tax they pay through their firms," Gabriel Zucman, an economist and tax specialist at the University of California, Berkeley, told me. "The main reason why the U.S. tax system was so progressive before the 1980s is because of heavy taxes on corporate profits."
President Biden is now trying to reverse some (but by no means all) of the decline in corporate taxes. His plan would raise the corporate tax rate, punish companies that move profits overseas and introduce a rule meant to prevent companies from paying zero taxes, among other things. The money would help pay for his infrastructure plan. "It's honest, it's fair, it's fiscally responsible, and it pays for what we need," Biden said at the White House yesterday.
Experts and critics are already raising legitimate questions about his plan, and there will clearly be a debate about it. Biden said he was open to compromises and other ideas.
But one part of the criticism is pretty clearly inconsistent with the facts: The long-term decline in corporate taxes doesn't seem to have provided much of a benefit for most American families.
Tags
Who is online
116 visitors
Joe Biden's demand to raise the corporate tax rate isn't progressive but it's certainly neo-liberal. Biden is just trying to protect the super rich with New York liberal shyster finance and shady banking practices.
C'mon, Joe. If you are going to tax the rich then impose taxes on the rich. We're aren't stuck in Biden's 1990's and those tired old political lies won't work any longer. We've been there, done that.
Joe Biden proves he will be a neo-liberal to the last. God help us all.
So pay no attention to actual charts.
Just bury your head in the sand....
Those charts are intended to deliberately mislead you. Make the income tax progressive. The income tax rate for the highest bracket should be 50 pct or more.
Figure out how high the upper income tax rate needs to be to address disparities and do it.
Joe Biden ain't doing anything to address disparities. Biden is playing the same old neo-liberal game of using corporations to collect taxes from consumers.
Joe and the Democrats seem to think they are smarter than corporations. Of course they are on the take from those self same corporations. Look no further than the PPACA for proof. The only ones benefiting from it are the insurance industry, and politicians getting donations, and spots on corporate boards.
So they are on the take from these corporations that they are trying to raise the taxes of...
Yeah, that pans out...