Let Big Corporations Keep Their Tax Cuts

Amazon fulfillment center in Bessemer, Alabama, while it was being built. Earlier this year, workers there rejected an attempt to unionize.

If they bring jobs to the US

Otherwise, any infrastructure bill has got to raise taxes on corporations to help pay for it. President Biden kind of is and isn’t budging on that in negotiations with Republicans. In meetings with Republicans, he’s now proposing a kind of flat floor on corporate taxes, so big corporations can’t get away with paying nothing or next-to-nothing, as many do now. That might maybe be preferable to Republicans than reversing their gigantic, multi-trillion dollar corporate tax cut, which was, after all, their biggest legislative achievement of the Trump years.

So either way, it’s all good.

But there’s another way, or at least an additional way: tell corporations if they add a job in this country, or bring back a job, they get a tax break.

And keep in mind Biden even at first wasn’t proposing anything more dramatic for corporate tax rates than raising them back to 28%: where they were before Trump and Republicans cut them. So in some ways it’s also understandable that Republicans would not like the idea of undoing a lot of what they so enthusiastically did in the first place. 

So maybe they’ll be OK with putting a floor on corporate taxes so corporations can’t get away with paying nothing?

Tossing these proposals back and forth kind of looks like old-fashioned political horse-trading. Is it? One significantly overlooked aspect to this story as far as I’m concerned is if Biden and Republicans do pull this off, it’ll be a huge step toward re-normalizing the business of politics. And in this case, also the politics of business. Which is why they probably won’t.

But who knows? A huge jobs bill should at least be something hard for Republicans to argue against, even to their own constituents.

But so is a tax policy that very actively encourages and rewards US job creation. And on top of that, of course, passing a big infrastructure package will in itself create a wealth of US jobs and lots of business for US corporations.

It’s not even like many corporations are saving huge wads of money anymore by keeping jobs overseas. As reviled as companies like Amazon have become, and even though it’s a necessity for a company that’s main business is delivering things domestically, they’ve also proved they can set up and run efficiently at least in states where they don’t have to pay very much to do so. (Yes, they should pay more, but they’ve also proved a lot of people will put job stability over salary.) 

Call centers too. It’s not that much cheaper to operate them overseas anymore. But a lot of companies still do because that’s what they’ve done for years, and they’ve already got relationships and people trained up to do it the way they want. So offer them incentives to change that and invest in US workers instead. 

And it isn’t just service jobs, although that seems like a good place to start. Manufacturing too, sometimes. Tesla’s an example of that, and they’re operating in a high-wage, high-tax environment. (Although they’re also a company that’s only recently started to consistently make a profit, and has never really had a lot of pressure to.)

Remember, a lot of the way Trump sold his big tax cut for corporations and rich people was saying it would encourage and in some cases force American companies to bring jobs back to the US. But then Trump didn’t actually do that. In fact, the bill he and Republicans passed continued to treat moving jobs and production overseas favorably. In fact, more favorably.

Stands to reason, because most bills are written by politicians closely affiliated with industry groups and lobbyists. That is, the people or groups that most stand to benefit. But Trump did say he’d stand in their way for the benefit of the American worker. And then didn’t.

All the rest, which we’re starting to hear again from Republicans almost as a chorus: that at the former, higher rate, corporate activity in the US is the most highly taxed of anywhere in the industrialized world, is and was a bunch of BS, because almost every other country in the industrialized world has a Value Added Tax, or VAT, which very often itself amounts to 20% or more on everything. So that’s on top of what those countries are charging their corporations in taxes.

Why is a VAT a burden on corporations? Well, corporations are consumers too in that they have to buy a lot of the products and parts that make up their products. And while VAT passes those costs quite frequently down the line to consumers, it makes it much more expensive for end users to buy whatever those corporations are producing.

Now, I’m not suggesting the US adopt a Value Added Tax. In fact, I think it would be a horrible idea. Because a nationwide federal sales tax that’s built in to the price of virtually anything and everything you buy is invisible and endless, so would be very easy for politicians to sneakily raise again and again. Even if their aims at the beginning were earnest and rather modest: funding a smaller-than-Biden-wants infrastructure bill, for instance. They just can’t be trusted to control themselves down the road. That’s why President Reagan rejected a US VAT the last time it was really really seriously considered.

That’s why bumping corporate tax rates back to where they were—and/or, of course, enforcing them—is vastly preferable.

The few revenue generating ideas Republicans are putting forth thus far in their own so far meager infrastructure counter-proposals do move in the direction of VAT-like taxes though, in that they are national consumption taxes, some of which already exist.

I’m not saying that would be some kind of entry ramp to a VAT on everything, and some of it may even be necessary, but new user taxes on drivers shouldn’t be the primary way of funding infrastructure at this moment in time. Higher gas taxes aren’t the immediate answer, especially since a lot of states are going to have to raise local gas taxes to try to make up for budget shortfalls due to lower income tax revenues caused by COVID-19. Yes, the federal government and states will have to figure out how to compensate for a decline in gas tax revenues that’ll be the result of more electric vehicles on the road as they become more popular. But right now, the average American driver isn’t the person who holds the hugest chunk of the wealth in the county. It’s corporations and rich people.

So let’s fix at least that. OK? Let corporations keep their lower tax rate if they build and hire and produce in the US. Force them to actually be “job creators”. That is, US jobs. Don’t stand for just letting themselves go around calling themselves “job creators” if they aren’t really, at least aren’t in this country. Otherwise, make them pay what they were paying before, for the luxury of moving away, and make sure they actually pay it.

That’s got to at least be the starting point for paying for rebuilding crumbling infrastructure and making sure America catches up and leads into the future in transportation and communication and all the areas this country has led in terms of innovation, but fallen way behind in terms of implementation.