Robert Reich: Six Reasons Why American Corporations Shouldn’t Get A Tax Cut – OpEd

Trump and Republicans are trying to sell you the idea that American corporations need a tax cut in order to be competitive. That’s rubbish. Here are 6 reasons why:

First, American corporations don’t need it in order to be competitive internationally. After tax credits and deductions, their effective tax rate is just about the same as paid by corporations in most of our major trading partners, according to the U.S. Treasury.

Second, American corporations are making more money than ever. Their after-tax profits are a higher share of the total economy than ever. American corporations earn nearly half of all global profits, even though the U.S. economy is about a fifth the size of the world economy.

Third, the long-term competitiveness of American corporations depends far more on a well-educated and skilled workforce, modern infrastructure, and basic research than on tax rates. And the way we finance these necessary public investment is through … taxes.

Fourth, American corporations are now paying less in taxes than they have in 65 years. Corporate tax receipts are the lowest percentage of the economy since just after World War II. If corporate taxes are cut, you will have to pay even more in taxes in order to make up the difference.

Fifth, if their taxes were cut, corporations won’t use the extra money to make new investments in plant, equipment, research and development, or jobs. They’re already using their vast stockpiles of cash to buy back shares and thereby boost stock prices, and for extravagant bonuses and salaries to CEOs and other top executives. That’s what they would do with any additional cash.

Sixth, the reason they’re not investing more is because consumers don’t have the purchasing power to buy more, and that’s because most people’s incomes have gone nowhere for decades. And why is that? Because corporations have been holding down wages by outsourcing abroad, substituting software for jobs, contracting work out to part-time workers, and fighting unions.

A corporate tax cut is the wrong solution to the wrong problem. The real problem is stagnant wages of most Americans, coupled with declining public investments in schools, roads, public transportation, and basic research – all the things average working Americans need in order to become more productive and get higher wages. To finance these we need higher corporate taxes, not lower.


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Robert Reich

Robert Reich

Robert B. Reich is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, and Time magazine named him one of the 10 most effective cabinet secretaries of the 20th century. He has written 14 books, including the best-sellers Aftershock, The Work of Nations, Beyond Outrage and, most recently, Saving Capitalism. He is also a founding editor of The American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences and co-creator of the award-winning documentary INEQUALITY FOR ALL.

2 thoughts on “Robert Reich: Six Reasons Why American Corporations Shouldn’t Get A Tax Cut – OpEd

  • October 3, 2017 at 7:22 am
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    This time the Fool himself doodles childish squiggles and declares “truths.’ But being cute and childish disguises the fact that his basic premise is faulty. The foundation beneath Robbie the Commie’s grammar school flubbery and fantasy is the contention that only government has and can provide for the necessary infrastructure to support the country. Cutting corporate taxes reduces the government’s income (and ability to do all those good things). How about an analysis of Child Reich’s six edicts glued to the bottom of the Declaration of Independence?
    1) Reducing corporate taxes won’t make United States firms internationally competitive. Oh, you are more fool than court jester. You insult your audience by assuming it suffers from RAD (Rational Awareness Deficiency). In contrast to foreign firms, our corporations are neither subsidized nor beneficially supported by currency manipulation. In short, our guys do not function as an extension of the government, they are standalone entities in an economically biased environment unable to compete nationally let alone internationally (not to mention remunerate their workers accordingly).
    2) Our corporations are making more money than ever, or some such gobbledygook. What’s this one fifth versus the world shit. With these monumental profits, the nation’s GNP is greater than ever! Is this a national attribute, an international attribute, a lunar attribute . . . what the hell is it? The mathematics used here border on magic, but if pressed Robbie the Magician, in a mystic moment, would declare this reasoning and answers came directly from God.
    3) Well-educated and skilled workforce, modern infrastructure, and basic research are the basis for WHAT? Long term competitiveness! The education system designed and implemented by successive Dummycrap governments churns out simpletons who although unable to identify Afghanistan on a map, lack in basic arithmetic and can’t tie their own shoes are entirely capable of rioting over perceived social ills at the drop of a fictional news release. Roberto, you advocate more of the same as the key to corporate success: foosh!
    4) It is necessary to rephrase your premise before it makes sense, thus: Corporation taxes today represent the lowest percentage of the government’s income in 65 years. Presented in these terms, one readily realizes why: corporations keep their profits overseas to avoid the exorbitant taxes you and your ‘progressive’ buddies would impose. Sounds like good business to me and consequently, government must turn to income taxes and an assortment of gouges to pay for political programs designed to support ‘entitlements’ including the reduction of Social Security payments of those with annual incomes of $200,000, the criteria of very rich, and taxed excessively to atone for the sin of investment and not indigence. Or confiscating inheritance rather than permitting families to keep the product of their effort.
    5) Corporations won’t use the extra money to make new investments or anything else beneficial you proclaim with prescience. Prescience my ass, what is the basis of this nonsense: stock buyback programs and executive pay. Dingdong Robert, silly idiot, you’ve never held a real job and just must live within the limits of a government stipend of nominal half million dollars a year for breathing regularly, while the CEO of a meg corporation receives less than 0.01% of the firm’s profits or several million dollars for leading the firm into green pastures. It’s neither buy back nor executive pay. Robert, clearly you envy those paid for a day’s work well done.
    6) “. . . consumers don’t have the purchasing power to buy more, and that’s because most people’s incomes . . .” Marx, himself would have been amused by your logic. Decades of Unions extracting ransom wages for menial make work resulted in jobs being shipped overseas where remunerated effort produced profitable result. It is that equation that applies, not oblique reasoning which defies rational analysis.
    Cretin Robbie, you lost and the American people won: SOBER UP

    Reply
    • October 3, 2017 at 12:58 pm
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      I typically like reading different takes on an issue and was genuinely interested in reading your novella of a retort. Unfortunately, your petty name calling and infantile insults ruined your credibility. I am sure some thought provoking logic might have been in there somewhere, but it is smothered by your rabid disdain for Mr. Reich. Your attempt at an argument failed miserably. Better luck next time.

      Reply

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