If we win on November 5, we can change that
By Rakeen Mabud
In
2017, Republican lawmakers passed tax loopholes and cuts that primarily
benefited the wealthy and big corporations. President Trump signed these
giveaways into law, spiking inequality and setting off a wave of corporate
profiteering.
Next
year, parts of that law will begin to expire, which gives us the opportunity to
make changes.
For
decades, both parties have created an economy where big corporations and the
wealthy aren’t pitching in like the rest of us. We’ve been sold a bill of goods
known as “trickle down” economics. Trickle down goes like this: Feed the rich
the best cut of meat and maybe we’ll get a bit of gristle that falls on the
floor — and we’ll thank them for it.
The
rich and most profitable corporations aren’t just contributing less and less to
our collective coffers. They’re using their power to enrich themselves further
while more of us struggle. Senator Elizabeth Warren recently described this as
a “doom loop” for our tax code: the wealthy
and corporations get richer from tax giveaways and then use their wealth and
power to boost their profits — and then lobby for more tax cuts.
For example, the 2017 Trump tax cuts dropped the top corporate tax rate to 21 percent from 35 percent (compared to 40 percent in 1987). Supporters argued this would lead to better wages and supercharge economic growth. Instead, economic growth continued at about the same pace as before the tax breaks. And while 90 percent of workers did not see a raise, billionaire wealth has doubled.
In
the same period in which corporations have enjoyed lower taxes, they’ve also
raked in record profits. As my colleagues at Groundwork Collaborative have
highlighted, lowering corporate tax rates actually incentivized corporate
profiteering in the wake of the pandemic, as companies that overcharged
us got to keep more of their winnings.
Trickle
down theory says these windfall profits and lower taxes should encourage
companies to invest more in workers and innovation. But in an economy run by
big corporations with enormous market share, that money ends
up being funneled to shareholders instead of increasing worker wages, investing
in new or more productive technologies, or holding critical inventories in case
of a crisis.
If
we want corporations to invest more in wages and productive investments, we
should raise their taxes, since wages and research are mostly
tax deductible.
In
other words, corporate profiteering is not a foregone conclusion. Raising
corporate taxes has the potential to boost investment, productivity, and
economic growth — and get Americans some of their money back.
The
Biden administration has taken critical steps to push back against failed
trickle down economics and corporate profiteering. It capped the price of
essential drugs like insulin, empowered regulators to go after corporations
abusing their market power, and made historic investments in a green future.
But more can be done by raising taxes on the largest, most profitable
corporations.
Fundamentally, the coming tax debate is about who holds the reins in shaping our economy: mega-corporations and their wealthy shareholders, or the everyday people who keep the economy humming. Next year is an opportunity for Congress to stand firm against the rich and powerful and build the economy that we want to see.
Dr.
Rakeen
Mabud is the Chief Economist and a Senior Fellow at the
Groundwork Collaborative. This op-ed was distributed by OtherWords.org.