"If the choice is between taxing soulless paper entities and human beings, personally, I’d go with the former. But I’m biased, being human."
This morning Jim Larnder has Erica Payne, the founder of Patriotic Millionaires on Feet To The Fire podcast to discuss tax justice and how corporations and rich people game the system... and how to unrig it. You can listen to the whole 22 minute episode on the video above. Payne starts by explaining how Stabucks "legally" cheats on their taxes by "moving" their company to Ireland. Corporations like Starbucks, she explains, are way more upset about how Biden plans to deal with this international shell game than the are about the very, very modest increase in a corporate tax rate, that was slashed by Trump from 35% to 21% and that progressives want to see back up at 35% (at least) but that Biden wants to raise to 28%, and which Joe Manchin and his conservative cronies say they will vote against (kill) anything above 25%. Conservatives prefer-- always prefer-- sales taxes and VATs where the burden falls primarily on the working and middle classes. Payne: "In our tax code, we basically treat working people worse than any other kind of people, with regard to taxes. If you are a working person, and you made $100,000 last year and I'm an investor-- and I never worked a day, but I did click a button on my e-Trade account and I made $100,000 off of that investment, I end the year 8 or $9,000 richer than you as a working person... and it gets worse if you inherit. If you work for a living and you make $11 million, you'll pay around $4 million in federal taxes. If I sit around and wait for a relative to die and that relative dies and sends me $11 million, I pay zero in taxes. So I haven't done a single thing to earn that money and I end the year $4 million richer than the working stiff."
This morning, progressive Washington congressional candidate Jason Call told me that "The characterization of Biden’s 'increase' on corporate taxes is some kind of win is unadulterated deception and extremely disappointing (but unsurprising). Like much of the messaging from the establishment it targets people who don’t pay a whole lot of attention to detail. Biden’s meager increase in corporate taxes still leaves it at a lower rate than the Obama administration. Corporate taxes are a tax on CEO salaries and shareholder profits. It’s a way to reduce income inequality. Corporate profits by and large go to the wealthiest in our society, as very few people are part of the 'investor class.' In addition to corporate taxation there must be an effective mechanism to prevent price-gouging, since the biggest pushback in increasing taxes is that corporations will just pass those taxes on to the consumer. We can’t allow the public to be abused on behalf of corporate profits any more than we can allow it for labor. We need to provide incentives or mandates for corporations to reinvest some of the money that goes to executive salaries and shareholder dividends into the workforce, by way of increasing hourly wages and benefits. It is possible to monitor and regulate this through state and federal agencies, however doing so requires a political will that isn’t going to come from elected officials who are bankrolled by big business. We need a political class that stands for labor and consumers."
In his NY Times column today, David Leonhardt noted that "Business lobbyists and conservative think tanks are not big fans of President Biden’s proposed tax increases on the wealthy. The Tax Foundation has said that Biden wants to raise the capital gains tax to 'highs not seen since the 1920s.' Suzanne Clark of the U.S. Chamber of Commerce called the same plan 'outrageous.' Jay Timmons of the National Association of Manufacturers called the proposed increase in the corporate tax rate 'archaic.' And Brendan Bechtel, the chief executive of the construction company that bears his family name, said that 'it doesn’t feel fair.' All of this rhetoric has obscured a basic fact about Biden’s tax plan: It would not actually raise tax rates on the rich to high levels, historically speaking. And the reality is that "the main effect of Biden’s tax plan... [will] be on the relative tax burden that wealthy people pay. When they criticize the plan as unfair, archaic and outrageous, they are really saying that they enjoy paying low tax rates."
If all of Biden’s proposed tax increases passed-- on the corporate tax, as well as on investment taxes and income taxes for top earners-- the total federal tax rate on the wealthy would remain significantly lower than it was in the 1940s, ’50s and ’60s. It would also remain somewhat lower than during the mid-1990s, based on an analysis that Gabriel Zucman of the University of California, Berkeley, did for The Morning.
This chart shows the total federal rate for both the top 0.01 percent of earners (who currently make about $28 million a year on average) and the top 1 percent of earners (who make $1.4 million on average):
The data is a reminder of just how far taxes on the wealthy have fallen over the past 70 years. In the decades just after World War II, many corporations paid about half of their profits in federal taxes. (Shareholders, who are disproportionately affluent, effectively pay those taxes). Today, corporate taxes are only about one-fourth as large, as a share of G.D.P., as they were in the 1950s and ’60s.
Whether you like Biden’s plan or dislike it, it is not radical. For that reason, it is highly unlikely to have the harmful effects on economic growth that its critics are claiming. Remember: In the 1990s, the last time tax rates were as high as the ones Biden has proposed, the economy boomed. It also grew rapidly after World War II, when tax rates were higher yet.
Muad Hrezi is also a progressive challenger, like Jason. He's running for a Connecticut seat occupied by a corporate Democrat. He told me a few hours ago that "For the past 40 years we've seen a neoliberal assault on the poor and middle-class. A huge part of that assault has been carried out by our tax code, which is currently operating to benefit and serve the ultra-wealthy. Biden's proposal just barely scratches the surface on what needs to be done. We need to increase the corporate tax rate and we need to stop international tax evasion. But there's more to be done. We need to close all these tax loopholes. We need to redesign our tax code so that incentives actions that will benefit working Americans and not Big Business. Put simple, we need a complete overhaul of how we approach taxes."