By Robert
Reich
To watch
this video on YouTube: https://www.youtube.com/watch?v=LyCjx2yCgi8
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:
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.
ROBERT B. REICH is Chancellor's Professor of Public Policy at
the University of California at Berkeley and Senior Fellow at the Blum Center
for Developing Economies. He served as Secretary of Labor in the Clinton
administration, for which Time Magazine named him one of the ten most effective
cabinet secretaries of the twentieth century. He has written fourteen books,
including the best sellers "Aftershock", "The Work of
Nations," and "Beyond Outrage," and, his most recent,
"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.
