Here we go again.
Details are still vague, but Donald Trump has given us a preview of what his tax "reform" plan is going to look like — another venture into supply-side economics, which have failed time and again to cause jobs and income to trickle down to help middle- and low-income Americans. We've seen it nationally since Ronald Reagan's first term and we've seen it locally right here in our own state government under Scott Walker. Giving corporations the opportunity to make more profits has failed to provide more jobs or raise the standard of living for 99 percent of the working people.
It's hard to fathom, but Trump's tax reform is amounting to nothing more than cutting the supposed onerous 35 percent corporate tax rate, giving tax scofflaw conglomerates that have parked their earnings overseas a huge break to bring their money home, and offering virtually no changes in loopholes and dubious deductions that have allowed lawyer-rich corporate giants to actually pay little or no taxes at all.
The only taxpayers who actually pay the rates set by law are individuals and small businesses who don't have the wherewithal to hire expensive lawyers to manipulate their incomes.
Take the example of communications giant AT&T, which has been able to gobble up competitors and build itself back into the monopoly it was before it was broken up by antitrust laws a half-century ago.
Its multimillion-dollar CEO, Randall Stephenson, appeared on CNBC earlier this year and proclaimed that if Congress cut the corporate tax rate from 35 percent to 20, "I know exactly what AT&T would do — we'd invest more" in the United States. He went on to say that every billion dollars in tax savings would create 7,000 well-paying jobs.
Those remarks led Sarah Anderson of the Institute for Policy Studies to take a closer look at the mega-firm's behavior the past several years. In a column for The New York Times, she reported that between 2008 and 2015, all profitable years for AT&T, the corporation paid an effective tax rate of 8 percent. Presumably, under Stephenson's theory, that should have allowed AT&T to create more jobs for Americans.
That would be wrong, Anderson found. Between 2008 and 2016 AT&T actually reduced its workforce by 80,000 jobs through acquisitions and spin-offs it engineered during those years.
Instead of adding workers with its lower tax rate, it spent $34 billion buying back its stock, which had the effect of escalating the corporation's share value, which benefits big shareholders and investment firms plus serves as a benchmark for determining CEO pay. Since 2008, she reported, Stephenson was able to cash in $124 million in stock options and grants.
But AT&T is not alone. There were 92 corporate giants that made sizable profits from 2008 to 2015 and paid less than an effective 20 percent tax rate. Again, though a 20 percent rate should presumably lead to more jobs, in actuality the opposite has occurred. Anderson found that the 92 corporations had an effective job growth rate over the past nine years of nearly a negative 1 percent, compared to 6 percent in the private sector as a whole.
Of the 92 corporations examined by the Institute for Policy Studies, 48 of those paying 20 percent or less in taxes actually unloaded 483,000 jobs during those years. Additionally, she reported, the institute found that CEO compensation among the corporations that cut jobs amounted to an average of $15 million a year. That's $2 million more than the average CEO pay for S&P 500 companies.
But CEOs like Stephenson brazenly promote the myth that all would be great for American workers if only their corporations didn't have to pay so much in taxes.
A better way to stimulate the economy and help create jobs is for everyone to pay their fair share by closing loopholes and levying taxes on those who now escape them, Wall Street speculators in particular. Anderson hypothesizes that a 1 percent tax on stock trading, for instance — just like the sales taxes everyone else in America pays for what they buy — could help encourage longer-term investing, which in turn would help increase employment.
Instead, once again, we're headed to "reform" that benefits the 1 percent among us and forgets the rest.
Dave Zweifel is editor emeritus of The Capital Times. firstname.lastname@example.org and on Twitter @DaveZweifel
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