An Innovative Solution To Corporate Taxation

While we’re talking about taxes…

Over the weekend The Zero Hour with RJ Eskow interviewed economist Dean Baker, co-director of the Center for Economic and Policy Research, to talk about “A New Way to Make Corporations Pay Their Fair Share.”

The idea is, as Baker wrote last week in the LA Times, Instead of taxes, make corporations give the government stock,

If the tax reformers are serious, and I hope they are, here’s one simple way to largely eliminate the gaming opportunities that have made these people rich.

Instead of traditional taxes, the government could require corporations to turn over a portion of their stock, say 25%, in the form of non-voting shares. The government would benefit from any dividends or share buybacks but would have no voice in running the company.

This system would eliminate almost all opportunities for gaming since a company would not be able to deny the government its share of profits unless it also withheld profits from its other shareholders. And we would not call that “tax avoidance” but outright theft – the sort of thing that gets people sent to jail.

This government (We the People) share of corporations would replace taxation, because the government would collect dividends or the value of the share would increase along with the profits (formerly taxable) of the corporation. The government and corporate tax-accounting bureaucracies would be unnecessary. Our democracy would receive revenue so it can do things to make our economy and lives better.

Why should the government (We the People) have a share of corporations? People generally do not understand what a corporation really is, and this common misunderstanding works to be benefit of those who make money off of them.

Corporations are entirely creations of government. They don’t exist without government. A corporation is a package of laws designed to accomplish a public purpose.

Individuals do not generally have the kind of capital available to accomplish large-scale projects like building a series of factories to make cars or airplanes. It’s also risky to sink so much of one person’t holdings into something like that so those with sufficient resources might not do it.

So government (We the people) created corporations to enable pooling of capital and reduction of individual risk. We (through our government) grant these entities the right to enter into contracts, write checks, hire people, borrow money, file lawsuits, etc. as if they were a “person.”

A common misconception is that shareholders “own” corporations. They do not, but shareholders do elect the Board of Directors, which hires people to manage the corporation according to the Board’s instructions.

People tend to think of and talk about corporations as sentient entities. But corporations do not think or decide or act or anything else. The managers of the corporation do that. For example, “Wells Fargo” did not “decide” to commit fraud against their customers, the corporation’s executives — people — did that.

Another common misconception is that corporations are required by law to do whatever they can to make profits for the shareholders. In fact this is a relatively recent concept that flourished as people’s understanding of the purpose of corporations diminished. In fact government does much to limit what corporations can do while seeking profits. They cannot (aren’t supposed to) kill or injure people to increase profits, cannot poison the air and water, cannot commit fraud, etc.

So the idea that government should keep their hands off of corporations and not hold some percent of them for the benefit of We the People is really preposterous. This thinking misunderstands what a corporation is, how and why it exists and what its purpose is.

The goal of Baker’s idea is to create a system where corporations are paying their share to We the People, without all of the incentives to come up with schemes to avoid taxes. Baker’s idea accomplishes that goal. Baker suggests that government hold 25% of corporate shares, but the tax rate has already dropped from 52% to 46% under Reagan to 35% today, and the corporate share of the overall tax burden has fallen from 32% to only 10%. SO perhaps a higher share would be appropriate for restoring revenue and democracy.

(See Lynn Stout’s The Shareholder Value Myth for a deeper dive into what and why a corporation is.)

Corporate Tax Cuts Are Really Just Tax Cuts For The Rich

Republicans are proposing a huge, huge cut in corporate tax rates. They are also proposing to let giant, multinational corporations keep much of the taxes they already owe on profits they are keeping in “offshore” tax havens.

Lower tax rates mean higher after-tax profits, which increases the value of stock holdings.

Who owns corporate stock, and therefore receives the benefits of these tax cuts?

Do We All Benefit From Corporate Stock?

Lets look at just who owns corporate stock.

Republicans like to pretend that all of us are invested in the stock market, if not by directly owning stocks, then through “our” retirement plans. This is usually written by and believed by upper-level, comfortable people that actually do have retirement plans.

But 45% of Americans have no money for retirement at all. Only 44% of Americans put anything into a 401K if their company offers one — and this number includes workers with only $100 in the plan. Only 18% of Americans are putting money in an Individual Retirement Account (IRA), ehich may or may not hold stocks. Only 4% of private-sector workers have only a “defined benefit” plan, usually called a pension.

So much for “our” retirement plans. Aside from retirement plans, a 2016 Gallup survey found that only 52% of Americans own any stocks at all – down from 65% in 2007.

So Who Does Own Stock?

Here is a chart of who owns corporate stock (and therefore pays those taxes.)

As of 2007, the top 1 percent owned 50.9 percent of all stocks, bonds, and mutual fund assets. The top 10 percent owned 90.3 percent. Things have only concentrated upward since 2007.

How much have things concentrated upwards since then? 20 Americans now hold as much wealth as half of all Americans put together and “the 400 richest Americans now have more wealth than the bottom 61 percent of the population.”

People talk about an “upper class” that holds most of the wealth in our society now. Maybe the thinking on this needs to change from a “class” of people to just a few people.

It is these few people who are the beneficiaries of corporate tax cuts. As tax rates drop the value of their stock holdings rises. The rest of us lose our ability to have good schools, roads, health care, courts, scientific research and all the rest of the things our government tries to do to make our lives better.

This is who we are talking about when we talk about corporate tax rates. It’s not anonymous, nameless corporation, it is people — just a few people.

Tax Cuts Defund The Very Things That Boost The Economy

After 8 years of complaining about “Obama deficits,” Republicans are proposing huge, dramatic, unprecedented tax cuts, especially for corporations. President Trump wants the rate cut from 35% down to 15%, denying the government $2 trillion of revenue over the next decade. He is also proposing dramatic income tax cuts for billionaires like him.

Republicans call corporate tax cuts “pro-growth,” saying they will give the economy a boost. Trump’s Treasury Secretary says the plan will “pay for itself with economic growth.”

So now they’re for “stimulus”?

But here’s the real question: do tax cuts actually boost economic growth?

What Tax Cuts Actually Do

In 2012 the Congressional Research Service looked at the data from past tax cuts and the effect they had on the economy, and issued a report titled, Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945. The summary explained,

This report attempts to clarify whether or not there is an association between the tax rates of the highest income taxpayers and economic growth. Data is analyzed to illustrate the association between the tax rates of the highest income taxpayers and measures of economic growth.

And what did the study find?

There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.

In fewer words: There is no evidence that tax cuts bring economic growth, but they do cause income to concentrate at the top.

But wait, it’s worse than that. Tax revenues build roads (and bridges and airports and rail systems and and water systems…), educate the population, conduct scientific research, run the courts, enforce regulations, standardize (and enforce) weights and measures, and about a million other things that make businesses prosper.

If you cut taxes, over time the business environment necessarily gets worse because those roads deteriorate, people are not as well educated, scientific research declines, courts clog up, regulation enforcement declines, along with about a million other things that businesses rely on. If you can’t get educated employees, can’t move goods on crowded and deteriorated roads and your competitors can get away with cheating, your business just isn’t going to do as well as it could.

Tax cuts defund all of those things that boost the economy and make our lives better. Over time the economy necessarily gets worse.

Are Taxes Theft?

Republicans say “taxes are theft.” They say “taxes take money out of the economy.” They say it “takes from those who work and earn and giving to those who don’t.” They say taxation “extracts wealth.” The idea behind this is that government is illegitimate and “uses force’ to “take people’s money” so “they” can have it instead. They argue there are “producers” and “moochers” and the moochers outnumber the producers and take from them.

These are all actually arguments against democracy. Substitute the words “We the People” for the word “government” in their arguments and you’ll see how this works. The “they” in their arguments isn’t some “other” that grabs the money, it is We the People. The idea of democracy is that We the People have a government and we decide how to allocate the resources of our economy to make our lives better. That means taxing and spending.

Democracy is taxing and spending. And by definition government sending is on things that make our lives better.

Are tax cuts theft? Or are they really about theft of democracy from We the People?

From Tax Cuts Are Theft,

The American Social Contract: We, the People built our democracy and the empowerment and protections it bestows. We built the infrastructure, schools and all of the public structures, laws, courts, monetary system, etc. that enable enterprise to prosper. That prosperity is the bounty of our democracy and by contract it is supposed to be shared and reinvested. That is the contract. Our system enables some people to become wealthy but all of us are supposed to benefit from this system. Why else would We, the People have set up this system, if not for the benefit of We, the People?

… The American Social Contract is supposed to work like this:

… But the “Reagan Revolution” broke the contract. Since Reagan the system is working like this:

Tax cuts eat the seed corn of our prosperity. We shouldn’t fall for yet another Republican con, this time from the con-man Trump.

Trump’s Goldman Sachs Vampire Squid Presidency

The things that come out of President Trump’s mouth seem to depend on who he talks to or what he sees on TV in the minutes immediately preceding his mouth motion.

Based on his recent switchbacks, Trump has been spending a LOT of time talking to the alums of Wall Street powerhouse Goldman Sachs who now form his inner circle.

“Changed His Tone”

Trump has reversed himself on policy after policy, sometimes days or even hours after reaffirming positions he then reversed. The New York Times describes this phenomenon:

But Mr. Trump has changed his tone and backtracked on pledges and policies he supported days earlier. The shift suggests that the moderate financiers of Wall Street brought to the White House are eclipsing the populists led by Stephen K. Bannon, the president’s chief political strategist.

The Washington Post’s Daily 202, written for DC-area insiders, describes this new direction as “Trump’s lurch toward corporatism, globalism.”

● He reversed his position on NATO, saying, “It was once obsolete; it is no longer obsolete.”
● He reversed his position on labeling China as a currency manipulator, after saying last week that China is “the world champion” of currency manipulation.
● He reversed his position on Fed Chair Janet Yellen, after having said she and other “global special interests” had ruined life for middle America.
● He reversed his position on interest rates, saying “I do like a low-interest-rate policy, I must be honest with you.”
● He reversed his position on the Export-Import Bank, saying now, “It turns out that… lots of small companies are really helped!”

Why all these sudden switches?

A Goldman Sachs Administration

Most of these reversals bring Trump’s positions as president nicely in line with the interests of Wall Street, the Chamber of Commerce and the giant investment bank Goldman Sachs.

Is it just a coincidence that this comes after Trump has lined his administration with former Goldman Sachs executives? Headline after headline explains that Trump has hired “yet another” veteran of the firm.

One of the latest, with very high influence, is Gary Cohn, Goldman’s former President and CEO, now chairman of the National Economic Council. According to Mother Jones, Cohn left Goldman with “an estimated $285 million severance package.”

Damian Paletta at The Washington Post writes about Cohn capturing Trump’s ear:

The growing strength of Cohn and like-minded moderates was on display this week as Trump reversed himself on several high-profile issues – including a less confrontational approach to China, an endorsement of government subsidies for exports and the current leadership of the Federal Reserve. The president’s new positions move him much closer to the views of Cohn and others on Wall Street, not to mention mainstream Republicans and Democrats.

It was the clearest sign yet that an alliance of moderates in the White House – including Cohn; senior adviser Jared Kushner, the president’s son-in-law; and another influential Goldman Sachs alumnus, Dina Powell – is racking up successes in a battle over ideology and control with hardcore conservatives led by chief strategist Stephen K. Bannon, who held sway at the start of the administration.

Goldman Sachs? You might remember (or tried to forget but haven’t yet) how Trump reviled their influence in his now-notorious “closing” TV ad. It featured images of Wall Street, stock tickers, Lloyd Blankfein, the Chairman and CEO of Goldman Sachs, and financier-philanthropist George Soros.

In the ad, Trump says ominously:

It’s a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities.

That was then. It worked; he got the votes.

This is now. Yes, Goldman Sachs.

Vampire Squid

Why does this matter? Matt Taibbi’s great 2010 article for Rolling Stone described how Goldman Sachs manipulates our economy for the benefit of its executives and investors. The Great American Bubble Machine begins,

The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Taibbi includes the warning,

…a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

And so here we are.

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This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.

United Incident Shows Why We Need To Re-Regulate Corporations

In a democracy, We the People are in charge. We are the boss of the corporations. At least that’s how it’s supposed to work.

Apparently, that isn’t so much the way it is anymore. The United States used to regulate corporations to protect people from concentrated power. Now concentrated power has taken over our government, which fights the people for the benefit of corporate profits.

Or, to paraphrase John Kenneth Galbraith and a Soviet joke: In democracy, We the People regulate corporation. In deregulated America is other way around.

The Face Of Deregulation

This is literally the face of deregulation of corporations:

This is what can happen to you now in the United States if you get in the way of something a corporation wants:

We’ve all seen the videos. A guy gets beaten and dragged from his paid seat on a United Airlines flight because, in essence, he was interfering with corporate profits just by being in the seat. The airplane was full, the corporation decided it could make more money by moving some employees to another town, and a passenger was in the way.

Airline Deregulation

Airlines used to be regulated in the U.S. as a public utility that served citizens. They competed with each other by offering better service.

Then in 1978, airlines were deregulated and passengers were considered consumers instead of citizens. The airlines argued that more competition would bring benefits. Instead, as time passed, airlines did what corporations tend to do.

They consolidated, reducing competition. They reduced and reduced and reduced service to reduce costs. They cut employee wages and benefits. They changed routes to “hubs” for their convenience, causing passengers to have to wait hours in crowded airports. And they write contracts that said you can’t use their (essential) service without signing away every right you have.

Since deregulation, airlines intentionally overbook many flights. They scrunch as many people into smaller and smaller seats just inches from the next, and sell you more legroom. Instead of serving food, they sell it. They charge you if you travel a suitcase. They charge you to bring a travel bag on the plane.

Soon, they will put a large spike in the seat and charge you to shorten it.

And you can’t do anything about it. You can’t even complain without risking being considered “disruptive” and dragged from the airplane and jailed. And be careful how you dress.

Not Just Airlines

It’s not just airlines. All kinds of corporate deregulation have been harming We the People. There used to be regulations requiring broadcast media to act in the public interest in exchange for use of publicly-owned broadcast frequencies. Now, obviously, there isn’t.

Pollution rules are being deregulated. Pesticides that harm children are being deregulated. The list is long.

“Arbitration clauses” are now used in all kinds of contracts and agreements to keep you from being able to take corporations to court. “Tort reform” laws also restrict access to courts when people are harmed by corporations.

You get the idea.

“Burdensome” Regulations

Corporations complain that regulations are “burdensome.” They complain that regulations cost them money.

Of course, regulations that stop corporations from polluting streams place a “burden” on them to properly dispose of waste. Of course it costs money to require them to not just dump waste into rivers, streams, and the air we breath.

Carmakers used to complain that rules requiring seat belts in cars were a “burden.” Tobacco companies used to complain that stopping them from selling cigarettes to kids “cost money.” So far, government regulation has protected us from these abuses-for-profit. But for how long?

Who Is Our Country FOR?

Americans have lost our understanding of the meaning of democracy and of the powers democracy brings us and duties it places on us. We have become consumers instead of citizens and we think that markets should make decisions for us instead of our votes.

In a democracy, We the People are supposed to be in charge. In a democracy, our government by definition exists to serve us, protect us, and do things for us that make our lives better.

A democracy regulates corporations to protect people from concentrated power. If we let concentrated power make decisions for us, we end up getting dragged off of airplanes because the corporation decided the seat we paid for would make them a bit more profit.

Corporations should be regulated to serve the public interest. Why else would We the People want to allow these things called corporations to exist at all?

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This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.

Did Trump Attack Syria for Personal Profit?

At any other time, this (fill in the blank) would be the scandal of the decade. Now, with Donald Trump as president, we call it Monday.

Thursday evening, Trump attacked Syria, a sovereign country, with 59 Tomahawk cruise missiles. This act of war was done without Congressional authorization, even after Trump’s August, 2013, tweet that “Obama needs Congressional approval” before attacking Syria in nearly-identical circumstances.

The following morning, headlines like this one appeared in the business press: Raytheon, maker of Tomahawk missiles, leads premarket rally in defense stocks:

Defense and energy stocks dominated the list of premarket gainers on the S&P 500 Friday, led by Tomahawk missile-maker Raytheon Corp., after U.S. missile strikes against a Syrian air base overnight.

Donald Trump apparently owns Raytheon stock. In May, 2016, Trump reported to the Federal Elections Commission (FEC) that he owned Raytheon stock. Interestingly, this FEC report does not appear to include the extensive web of offshore anonymous shell corporations Trump uses to mask assets.

Since that filing Trump’s assets have not been sold with the proceeds placed into a “blind trust,” and there is no public record of his having otherwise sold the stock. Not only that, but Trump is able to draw cash from his “trust” at any time. He could literally have pocketed cash from his gains from attacking Syria.

Conflict Of Interest

Trump has a clear conflict of interest here. He ordered an attack using missiles from a company he owns stock in, the company stock went up as a result, Trump made a profit. He didn’t order the military to drop bombs, though he likely owns stock in companies that make bombs, or interrupt a Mar-a-Lago dinner to order a Seal team to raid the offices of the officials who ordered the gas attack. There is every reason for people to ask if personal profit was a factor in ordering the Tomahawk missile attack.

We don’t know, but there is the appearance of Trump potentially having done this for financial gain. This is why conflicts of interest matter.

The pubic has a right to be concerned about this.

Past Scandals

Compare the appearance of potential conflict-of-interest in Trump’s Syria attack to a past scandal that was considered major, received extensive news coverage and resulted in years of investigations.

In 1993, President Bill Clinton dismissed seven employees from the White House Travel Office after investigations discovered financial improprieties. Among other reported improprieties, it appeared that companies that contracted to provide lucrative travel services were issuing “refunds” that the Travel Office director was putting into his own bank account.

Republicans accused Clinton of firing the employees so that “friends,” including a third cousin, could get the jobs, and so that companies from Arkansas could get contracts.

This became a major scandal that resulted in literally years of investigations. The national news media did front-page reporting on the “scandal” for years. Republicans forced investigations by the FBI, the General Accounting Office, the House Government Reform and Oversight Committee (1996 report), the Senate Special Whitewater Committee and finally an independent prosecutor. In 2000, a Special Prosecutor declined to prosecute the Clintons for the firings, but the mainstream news media were still at it. Fourteen years later, the right-wing media were still at it.

Compare everything in that seven years of major scandal and investigations, resulting from firing seven travel office employees for appearing to be taking kickbacks, to any given day of the Trump administration. For example, where the Clintons were investigated because a third cousin ended up with a White House job, Trump has hired his daughter and son-in-law.

A Lot More Than Just Raytheon

Trump’s direct and potential conflicts go vastly beyond just his Raytheon stock. The Atlantic looks at just his own company’s holdings, page after page,, in Donald Trump’s Conflicts of Interest: A Crib Sheet.

This is, needless to say, unprecedented. It shows how far “down the rabbit hole” Trump and the Congressional Republicans who refuse to old him accountable have taken the country. Things that would be major scandals in the past are barely even mentioned today.

There is a national Tax March on April 15 to demand that Trump release his tax returns, so we can at least begin to get a handle on his multiple conflicts of interest. There is a large march in Washington, DC along with marches in cities around the country. Go to TaxMarch.org to locate an event near you.

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This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.

White House Propaganda, Graft: This Is Not Normal

Early in this millennium, Mississippi’s Trent Lott was the Senate’s Majority Leader. Then it was disclosed that he had done something outside the bounds of what most Americans considered “normal” and acceptable. Lott had spoken favorably about Strom Thurmond’s 1948 Presidential candidacy on a platform of racial segregation. So he had to go.

Favorable comments about a segregationist were enough to unseat a national leader fifteen years ago. This was considered a major scandal, and a short time after his comments were revealed, Lott was forced to resign his leadership position in the Senate.

That is what “normal” used to mean. That was then, this is now.

Breitbart is a “news” website, which was until recently run by Steve Bannon. It is a far-right outlet that promotes “alt-right” concepts often involving white nationalism.

Bannon often refers to what he calls a “‘Camp of the Saints’-type invasion” to describe what he sees as a rising tide of threats to Western civilization. When he says these things,  Bannon is referring to a 1973 French novel that “describes the takeover of Europe by waves of immigrants that wash ashore like the plague,” and “reframes everything as the fight to death between races.”

Steve Bannon, race-baiting propagandist, is now the White House Chief Strategist. Yet this is not a national scandal.

In fact, Bannon is not the only “alt -right” person in the Trump White House. Other Breitbart staffers are also getting jobs in the new administration, as are other far-right figures. It is said that White House alt-right figures removed reference to the genocide of Jewish people in the White House’s International Holocaust Remembrance Day statement.

This is not normal.

President Trump recently accused former president Obama of a massive criminal conspiracy involving abusing presidential power to “wiretap” Trump’s campaign to help Trump’s opponent. This is , to say the least, not normal.

The White House has begun sending Americans a daily state-propaganda email “newsletter” called “Your 1600 Daily.” It is sent unsolicited, in violation of the 2003 CAN-SPAM Act. It comes from an official White House government email address, and is signed by “The White House. ”

One day this briefing advertised a meeting with “victims of Obamacare.” Another asks Americans to “Share Your Obamacare Disaster Story With President Trump.” Wednesday’s makes the claim, “Under his leadership, the United States will be the world’s great magnet for innovation and job creation.”

It promotes extremist news outlets like Townhall, and white nationalist outlets like Breitbart.

This is just not normal. In other times this, too, would be a major scandal.

And then there is the blatant moneymaking. Last week China granted Trump a number of lucrative trademarks, after Trump broke a campaign promise to declare China as a currency manipulator, which would have initiated a process that could lead to tariffs on Chinese-made goods entering the country.

This week we learn that the family of Trump’s son-in-law and top adviser Jared Kushner will make at least $400 million in “a sweetheart deal” with a Chinese-government-connected firm.

But there are a number of red flags surrounding the transaction, and no way to rule out concerns that this represents just the latest instance of potential conflicts between the Trump administration’s obligation to the public and its own financial gain.

And that’s just a taste of the financial shenanigans going on. For example, despite Trump’s pledge to “drain the swamp” in Washington from the influence of lobbyists, his former campaign manager, Corey Lewandowski, has started a lobbying firm. See if you can guess what he’s selling to clients.

Fox News commentator Monica Crowley was asked to join the Trump White House, but had to back out after it was disclosed that she had engaged in plagiarism. Now it is reported that she is going to work as a lobbyist for Victor Pinchuk, a Ukrainian billionaire and Putin supporter. She’s making big bucks, because she has influence with the Trump White House. That is just a recent example of so many examples of corruption.

But wait, there’s more. The President of the United States is holding campaign rallies just one, two months into presidency. And he is raising “campaign funds” from donors. What?

Meanwhile the Republicans in Congress, in the thrall of corporate cash and billionaires, assist their benefactors rather than do their Constitutional duty to hold these people accountable.

This is like the story of the frog in boiling water. The water is starting to boil, but because the warming happens slowly, the frog gets used to it and doesn’t notice it is cooking.

What’s going on here is not normal. They are so much not normal and happening so fast that we risk becoming desensitized to what normal means.

So a reminder: This is not normal. Do not allow yourself to ease into any level of acceptance of this, or a belief that what is happening in our country is part of a pattern or a political pendulum that will swing the other way or a back and forth between parties or think checks and balances are going to save us and our nation.

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This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.

Whoppers Big and Small in Trump’s Speech

This is classic dumb guy wedding speech writing: “The chorus of their dating became an earthquake of their love.” – Samantha Bee on Trump’s speech

Donald Trump just gave a fact-free, and detail-free, speech to a joint session of Congress. Early on in the evening, the president – who has loaded his cabinet with billionaires and his administration with former Goldman Sachs executives – earned audible guffaws from the assembled lawmakers when he declared, in all seriousness, “We have begun to drain the swamp of government corruption…”

With illegal border crossings at the lowest level since 1972, Trump devoted a good portion of his speech to spreading fear of undocumented immigrants. But only those from the south. There are twice as many immigrant visa “overstays” by Canadians as Mexicans. Meanwhile back in the real world, net migration from Mexico  is below zero – more are leaving than coming

Trump claimed our borders are “wide open… for drugs to pour in at a now unprecedented rate.” But not only are our borders more secure than ever, our country’s much-publicized opioid addiction problem is the result of pharmaceutical company marketing, not Mexican drug gangs. American physicians have legally prescribed enough painkillers – largely in Trump-voting states – to stupefy people enough to, well, elect Trump.

Trump also spoke of immigrants committing crimes, asking what would those in Congress say to an American family when immigrants take “a loved one” from them. However, the New York Times reports that “Contrary to Trump’s Claims, Immigrants Are Less Likely to Commit Crimes.” Oh well.

But rather than run the risk that facts might distract the public from his agenda of fear, Trump showcased family members of people who had been killed by immigrants, then announced that he is setting up an official Ministry of Fear, saying,

I have ordered the Department of Homeland Security to create an office to serve American Victims. The office is called VOICE — Victims Of Immigration Crime Engagement. We are providing a voice to those who have been ignored by our media, and silenced by special interests.

Trump stressed that immigrants take jobs and income from American families. The Economic Policy Institute (EPI) took a 2014 look at this claim, “there is broad agreement among academic economists that in the long run, immigration has a small but positive impact on the labor market outcomes of native-born workers, on average.”

Then Trump went after Muslims, saying, we can’t allow “allow uncontrolled entry” to our country because – “the vast majority of individuals convicted for terrorism-related offenses since 9/11 came here from outside of our country.” Pushing the fear further, he said,

“We cannot allow a beachhead of terrorism to form inside America — we cannot allow our Nation to become a sanctuary for extremists.”

Trump conveniently neglected to mention the severe vetting process refugees and immigrants from Muslim countries already face, or the fact over half of the people the Department of Homeland Security has determined were inspired by a foreign  group to attempt terrorist attacks in the U.S. were born in the U.S. And he certainly wasn’t about to bring up native-born white, Christian terrorists.

Trump promised to “work to bring down the artificially high price of drugs and bring them down immediately.” This promise comes less than a month after this headline, “After meeting with pharma lobbyists, Trump drops promise to negotiate drug prices“.

On the very day that headlines read, “Trump signs executive order to roll back clean water rule“, he said, “My administration wants to work with members in both parties to… promote clean air and clear water…”.

Trump also presented environmental destruction as a jobs program, saying for example,

We have cleared the way for the construction of the Keystone and Dakota Access Pipelines — thereby creating tens of thousands of jobs — and I’ve issued a new directive that new American pipelines be made with American steel.

In fact, as DeSmogBlog points out, Like Keystone XL, Much of Dakota Access Pipeline Steel Made by Russian Company Tied to Putin. And the jobs? A few thousand construction jobs, for a few months while the pipelines are constructed, in an economy adding more than 200,000 jobs a month, and then “Operation of the proposed Project would generate 35 permanent and 15 temporary jobs, primarily for routine inspections, maintenance, and repairs.

These are just a few examples of what we are dealing with when we hear Trump speak. Big whoppers, little whoppers, bamboozlements, empty promises, detail-free policy mumblings, flat-out intentional lies, trickery, and always the fear and the fear and the fear and the fear and the fear.

But this time his “tone” was supposedly easier to stomach. Did anyone fall for it?

Tax Cuts Steal Democracy

The Trump administration, as have all Republican administrations, is promoting tax cuts for the rich, saying they will “create growth.” Never mind the destructive history of tax cuts, the destructive history of “trickle-down economics” (and the destructive history of Republican administrations generally) — they’re doing it again.

Getting A Few Bamboozlements Out Of The Way

Any time taxes come up, decades of Republican bamboozlement gets in the way of rational discussion. Republicans say things like “taxes take money out of the economy” and “tax cuts create growth” to trick people into supporting tax cuts for the rich and corporations (which are really just more tax cuts for the rich).

So it is reasonable to look at what has actually happened when taxes on the rich have been cut. History shows that tax cuts have never produced “growth.” (See also, the Congressional Research Service’s non-partisan study, “Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945“: “Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth.” Also, take a look at what happened in Kansas and six other states when they tried to grow their economies through tax cuts.)

Tax Cuts Defund Our Democracy And Concentrate Power At The Top

So tax cuts do not “grow the economy.” They just don’t. But tax cuts and the resulting drop on revenue to our democracy are used to force cuts in the things our government does to make our lives better and help our economy prosper in the longer term.

When people have a say in how their government is run they say they want good schools and colleges, good infrastructure, health care, scientific research, good courts, and all the things that government can do to make our lives better. They also say they want a “flatter” wealth distribution, with people at the bottom having a way to make a living, and people at the top helping pay for our democracy by pitching in more of the gains that democracy brings.

When people don’t have a say in how their government is run, the economy delivers for a few at the top while leaving the rest behind. And this concentration of wealth also concentrates their power over our governmental decision-making.

Tax cuts don’t just force a drop in revenue to our democracy, they push the benefits of our economy to a few at the top. The Congressional Research Service study mentioned above, Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945, found that tax cuts do not bring economic growth. The study also found, “However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”

Democracies demand high taxes at the top because the revenue is good for the economy in the long term. Taxes bring in revenue to pay for education, scientific research and improvements in infrastructure that cause the economy to grow. Investing in modern transit systems, smart grid, energy efficiency, fast internet and other improvements leads to a huge payoff. Infrastructure improvement and maintenance is the “seed corn” of economic growth. We have been eating that seed corn since Reagan’s tax cuts. Prosperity is the fruit of democracy.

Tax cuts do not “take money out of the economy”; they redistribute it to places where We the People decide it can be better used to help make all of our lives better and grow our economy. But the Reagan tax cuts were used to force cuts in things like education, scientific research and, unfortunately, maintaining and modernizing our infrastructure.

Our economy has been in trouble ever since. From the 2010 post, Reagan Revolution Home To Roost — In Charts:

Working people’s share of the benefits from increased productivity took a sudden turn down:

This resulted in intense concentration of wealth at the top:

And forced working people to spend down savings to get by:

Which forced working people to go into debt: (total household debt as percentage of GDP)

None of which has helped economic growth much: (12-quarter rolling average nominal GDP growth.)*

Tax cuts steal from democracy.

Tax Cuts Force Unsustainable Business Models

The dramatic decrease in top tax rates has also forced unsustainable “sell the farm” business models.

From the 2010 post 14 Ways A 90 Percent Top Tax Rate Fixes Our Economy And Our Country:

A return to Eisenhower-era 90% top tax rates helps fix our economy in several ways:

1) It makes it take longer to end up with a fortune. In fact it makes people build andearn a fortune, instead of shooting for quick windfalls. This forces long-term thinking and planning instead of short-term scheming and scamming. If grabbing everything in sight and running doesn’t pay off anymore, you have to change your strategy.

2) It gets rid of the quick-buck-scheme business model. Making people take a longer-term approach to building rather than grabbing a fortune will help reattach businesses to communities by reinforcing interdependence between businesses and their surrounding communities. When it takes owners and executives years to build up a fortune they need solid companies that are around for a long time. This requires the surrounding public infrastructure of roads, schools, police, fire, courts, etc., to be in good shape to provide long-term support for the enterprise. You also want your company to build a solid reputation for serving its customers rather than cheapening the product, pursuing quick-buck scams, cutting customer service, etc. The current Wall Street/private equity business model of looting companies, leaving behind an empty shell, unemployed workers and a surrounding community in devastation will no longer be a viable business strategy.

3) It will lower the executive crime rate. Today it is possible to run scams that let you pocket huge sums in a single year, and leave behind the mess you make for others to fix. A high top tax rate removes the incentive to lie, cheat and steal to grab every buck you can as fast as you can. This reduces the temptation to be dishonest. If you aren’t going to keep the whole dime, why risk doing the time? When excessive, massive paydays are possible, it opens the door to overwhelming greed and a resulting compromising of principles. Sort of the definition of the decades since Reagan, no?

Who Pays For Tax Cuts?

Conservative economics claims that tax cuts do not have to be “paid for.” (Modern Monetary Theory shows otherwise, but that’s for another post.)

Trump uses the old “tax cuts pay for themselves” bamboozlement to claim that much of the revenue lost from his tax cuts will be made up for by increased growth. They won’t, of course. Trump also throws in a number of things that will actually increase taxes on the non-rich, while hurting homeowners and nonprofit organizations.

One place the Trump tax cuts plan to “pay for” the huge windfall for the rich is by limiting or eliminating the mortgage interest tax deduction.

Another “pay for” is eliminating tax deductions for charitable giving. In “Will Trump’s Tax Plan Hurt Philanthropy?” Ben Paynter explains what this will do to nonprofits.

“In the long run, the Center for Effective Government estimates that the proposed policy could reduce cause organization funding by $9.1 billion annually. And United Way Worldwide has reported that nearly two-thirds of Americans might reduce giving by 25% or more.”

Marques Chavez of The Alliance for Charitable Reform names a few names, in a letter to the editor that appeared in The Hill

“The Tax Policy Center found that a cap on the charitable deduction, as proposed by President Trump, would cost as much as $26 billion in charitable giving in one year. That is more than the combined operating budgets of the American Red Cross, Goodwill Industries International, YMCA of the USA, Habitat for Humanity, Boys and Girls Clubs of America, Catholic Charities USA, the American Cancer Society, United Way Worldwide and Feeding America.”

What tax cuts actually do is steal our democracy out from under us.

The Republican Congress and President Trump are proposing more huge tax cuts for the rich and corporations. Call your member of Congress and your senators, and visit their offices, to let them know how you feel about this. Join #ResistTrumpTuesdays here.

You can find local actions here and a local #Indivisible group here.

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This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.

The ‘Lower The Tax Rate To Attract Businesses’ Competitiveness Scam

Now that Republicans are running Congress and the executive branch, they’re planning to “reform” (cut) corporate taxes (again). This time they using the subterfuge of “this will make companies more competitive.” What does that mean? Of course, under Republicans, it really means one and only one thing: cutting taxes on the rich — rich people.

The top corporate tax rate used to be 52 percent. Under President Ronald Reagan it was 46 percent. Then Congress “reformed” corporate taxes and dropped the rate to just 35 percent. (Except for giant, multinational corporations. They were handed a “deferral” break that cut their taxes to zero.)

Corporations used to shoulder 32 percent of the total tax burden. Now they shoulder only 10 percent of the burden — a drop of two-thirds. The difference has been made up from cuts to infrastructure, schools, health care, scientific research and all the things our government does to make our lives better — and to help our economy prosper over the long term.

That’s the trade-off when taxes are cut. It means our government has to cut the things it does to make all of our lives better.

Who Gets That Money?

As corporate taxes were cut (thereby making it harder for the government to do things that make our lives better), where did that money go instead? It obviously didn’t go toward higher wages or shorter working hours or other things that might have made the tradeoff somewhat worth it for regular people, at least in the short term. No, time has shown us here it went: straight to a few at the top.

Politifact said it was true when Bernie Sanders, in Madison, claims top 0.1% of Americans have almost as much wealth as bottom 90%. Joshua Holland explains how it happened, writing at The Nation in 2015 in 20 People Now Own As Much Wealth as Half of All Americans,

The concentration of wealth at the top isn’t the result of some sort of organic process. The top one-10th of 1 percent of American households controlled about 7 percent of the nation’s wealth in the mid-1970s. By 2000, their share had grown to about 15 percent, and today it’s well over 20 percent. Those at the very top didn’t become three times as smart or lucky or good-looking in the intervening years. They’ve benefited from changes in things like trade policy, the tax code, and collective-bargaining rules — all policy changes they’ve used their wealth to champion.

That is where the money goes when corporate taxes (and rules and regulations and the bargaining power of regular people) are cut. It goes to a few actual, living people instead of toward the betterment of all of us and our economy.

Corporations Don’t “Do” Things. They Don’t “Make Decisions” or “Talk”

Over the last few decades a constant barrage of corporate/conservative propaganda has misinformed public understand of what corporations are, and why we have them. People have come to think of corporations as sentient beings that “do things,” like make decisions and speak. But corporations are things, like chairs and hammers. (Actually, they are more like wills or sales contracts.)

Corporations are things — legal contracts — that people use to get certain things done, for themselves.

These days corporations have also become things that are used to obscure or mask what certain people do. A corporation doesn’t “decide” to pollute a river or cheat a customer or hide profits in the Cayman Islands. And Bob in accounting or Alicia in marketing don’t decide to do that, either. But “the corporations” get the blame while really a few people who manage the corporation do things, and they do those things for their own, personal gain.

This is the important thing to understand. People make decisions and personally benefit; corporations do not.

When we cut taxes on corporations we are actually cutting taxes on a few people. And not just people, but very, very rich people.

The “Competitive” Argument

This time around the Republicans are trying to bamboozle everyone by claiming that we “need” to cut taxes on corporations so they will be more “competitive.” (As if our corporations are not already making the highest profits in history.)

Gayle Trotter captures the company line at the Washington Examiner, in Trump’s corporate tax plan will make America competitive again,

Lowering the corporate tax rate from 35 percent to 15 percent will help, not only to keep businesses here, but also bring jobs and innovation back home by reducing wacky incentives for United States companies to migrate offshore in tax-driven “inversion” deals.

This is legislation-by-extortion. This argument has giant corporations threatening to renounce their U.S. citizenship, and harm our country by killing American jobs, etc., unless we give them (the executives who make the decisions — and the threats) more money. This argument also threatens American entrepreneurs who want to start companies here, with its appeal to giant foreign companies to move here and serve those markets instead.

The argument also ignores what really makes a country “competitive.” That is the infrastructure, education, scientific research, court system and other things well-funded governments do to fertilize the soil from which companies can grow and prosper. Cutting corporate taxes cuts a government’s ability to nurture that soil — for the sake of a short term gain for a few executives who are making these extortion threats.

Switzerland Got Wise to the Con

A week ago Switzerland had a vote on lowering their corporate tax rate, “to attract businesses,” but the voters got wise to the con, with 60 percent of them voting to reject the extortion argument, as AFP reports,

The proposal would have leveled the tax rate for domestic and foreign firms while creating new deductions for innovation as well as research and development, tailored to attract global companies…

The left-wing Socialist Party (PS) called the government’s plan a “scam” that would have forced ordinary taxpayers to fill inevitable revenue shortfalls.

The referendum had “shown the red card to arrogance,” the party said in a statement, claiming the days of giving sweetheart deals to powerful corporations were “no longer tolerated.”

“Dollars Go to Support the Communities That Help to Make Their Businesses Thrive”

In April, 2015, the Main Street Alliance pushed back against these extortion threats, issuing a statement that SMALL BUSINESS OWNERS JOIN OTHERS ACROSS THE COUNTRY, PLEDGE TO REMAIN AMERICAN BUSINESSES,

With Tax Season in full swing, business owners and working families across the country are standing together, proud to live, work, and support the United States and their local communities. Small business owners across the country know that their tax dollars go to support the communities that help to make their businesses thrive. Investments in our schools, public infrastructure, safety, and much more depend on everyone paying their fair share of taxes.

Good for them. And good for people like the voters in Switzerland who did not fall for this “competitiveness” bamboozlement.

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This post originally appeared at Campaign for America’s Future (CAF) at their OurFuture site. I am a Fellow with CAF, a project of People’s Action. Sign up here for the OurFuture daily summary and/or for People’s Action’s Progressive Breakfast.

This Isn’t Just Trump. This Is Who the Republicans Are.

So far President Trump has signed very few bills. One lets coal companies dump waste into streams. The other lets oil companies bribe foreign dictators in secret. And he is moving to block a Labor Department “fiduciary rule” that requires financial advisors to act in the best interests of their clients when advising on retirement accounts.

Here’s the thing: this isn’t just Trump doing this. The Republican House and Senate passed those two bills, and the Republicans have been fighting that fiduciary rule tooth and nail.

It’s not just Trump, Republicans as a party are using Trump to engage in a general assault on protections from corruption, pollution, corporate fraud and financial scams.

This is who they are.

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