But...think of the children!
While the colossal impact of Hurricane Harvey continues to dominate most of the news, Republicans in Congress are moving to take advantage of the cover it has provided to accomplish their most important goal—increasing the vast amounts of wealth already paid to corporate CEO’s, so these same CEO’s can pass even more obscene sums of money to their grandchildren, and great-grandchildren, far into the future. And while the GOP and Trump have had their differences over the past few months, they’re in complete lockstep on one issue—this process of enriching the wealthiest Americans must involve cutting taxes on corporations, and cutting them massively.
It’s why Trump immediately pivoted from those annoying and bothersome Hurricane photo-ops to a rally in Missouri, where he expounded about the incredible number of jobs that cutting the corporate tax rate would supposedly generate. This is the perennial fairy tale spun by the Republican Party to justify cutting taxes for their wealthy donor base—that more money in the hands of corporate CEO’s will prompt them to hire lots more people and “invest” in R & D, magically resulting in all kinds of swell jobs for Americans. And as an abstraction, that sounds almost plausible, until you look at what actually happens when you cut corporate taxes:
A new report from the Institute for Policy Studies shows this isn’t true. US companies are already paying minimal amounts in corporate taxes, and the ones most likely under Republican theory to pour tax savings into job creation have instead been more likely to cut their workforce over the past nine years. The data shows that low corporate tax rates more often lead to increases in CEO pay and boosts for shareholders.
The reality over the last ten years is that virtually no jobs were created by cutting corporate taxes. The only people who benefited from such cuts were CEO’s, highly compensated Officers and Directors, and, of course, their extended families who will enjoy the fruits of this wealth for decades (if not centuries) to come.
Republicans like to claim that American corporations pay the highest taxes of any country in the world. But that’s crap:
[I]t’s important to recognize that the 35 percent US corporate tax rate doesn’t reflect what corporations actually pay. The average effective corporate tax rate in the United States, once deductions are factored in, is around 27 percent, putting it below the global average. If you limit the review to profitable corporations, the number drops to 19.4 percent. Corporate taxes as a share of GDP have fallen threefold since 1952, from 6 percent to 2 percent. Far from being overtaxed, corporations have carried an increasingly lighter burden.
The reason corporations can do this, of course, is because over the past few decades they’ve rigged the Tax Code through their Representatives both at the state and national level. And in those rare instances when the American tax code doesn’t provide a “loophole” or a “deduction,” well, they just reinvent themselves as a “foreign” entity and stash their profits overseas. Because it doesn’t matter to the CEO where the money is kept as long as it pays for Junior’s “legacy” tuition at Groton or Yale.
The IPS study examined 92 corporations that paid a corporate tax rate of 20% or less—thus providing an excellent “test sample” since such “sparsely-taxed” corporations should (at least under Republican “theory”) be creating jobs at a fantastic clip. But here’s what they found:
[T]he lower rates didn’t correspond to job creation. Collectively, the 92 profitable corporations cut jobs by 0.74 percent over the period studied, from 2008–16. During that same time, the private sector added jobs at a 6 percent clip. So low-tax corporations did far worse on hiring than their counterparts.
More than half of the firms in the study, 48 in all, cut jobs, affecting 483,000 workers. AT&T shed 79,450 positions, the most in the study, and Verizon cut 78,450, despite having 8.1 percent and 9.1 percent corporate tax rates, respectively. 21st Century Fox, with a low 15.6 percent tax burden, eliminated almost half of its workforce over the 2008–16 period. Incredibly, the main tax credit it took was for “domestic production activities,” which was intended to keep jobs in the United States.
It’s important to note that the period measured extended through the peak of the Recession through and including the Obama Recovery. So these companies were still laying off even as the economy improved drastically. The worst offender was General Electric, which actually had a negative tax rate thanks to multiple deductions (-3.4%). In spite of this, GE still cut 14,700 jobs.
So where did all this money go? Straight into the CEO’s pockets, either through direct compensation or stock buybacks, which grossly and disproportionately benefit CEO’s and corporate officers. The study provides a few glaring examples:
Fox’s Rupert Murdoch’s compensation increased by 74 percent at the same time that he was drastically cutting jobs. CEO compensation at AT&T rose 146 percent. Rex Tillerson, the current secretary of state, enjoyed $27 million as CEO of ExxonMobil in 2016 and a $180 million stock payout for entering government service. By contrast, ExxonMobil, which paid a 13.6 percent US tax rate, got rid of over one-third of its total jobs worldwide.
To add insult to injury, the “low-taxed” corporations included in the study shed jobs at a higher clip than the higher-taxed ones.
These conclusions are supported by plenty of other research on the issue as well. And it shouldn’t be hard to figure out why—if you as a CEO can keep more money for yourself while maintaining your profits without having to pay for new employees, you’re going to do it. If you can downsize, offshore or automate your labor force and still get rich, you’re going to do it. And that’s exactly what this study shows.
So what we have here is a consummate snow job being peddled by the Republican Party and loudly cheered on by corporate CEO’s eager to siphon off even more money that could instead by used to provide health care, housing, and other services to ordinary Americans, not the least of whom are currently trying right now to survive the incredible and far-reaching economic shocks of a natural disaster in Texas.
If they wanted to be honest, though, Republicans would simply explain that Americans really need to think of the children—those suffering children of corporate Billionaires.
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