This was originally published on Vice Impact.
The driving argument behind the controversial tax plan stimulating the American economy was just a front. Wall Street, not Main Street, will reap the rewards.
This is an opinion piece by Patti Lynn, executive director of Corporate Accountability.
President Trump has signed the tax bill that was sent to his desk last week and while the tax scheme remains wildly unpopular with the majority of people in the U.S., there’s one group that is gleefully celebrating an early Christmas this year– corporations. Over the past weeks, news analysis has focused on how this tax scheme funnels money to the wealthy and to corporations, but what people aren’t talking about is how this plan is essentially legislation by and for corporations. A deeper look reveals that this tax plan is a symptom of the destructive corporate influence in our democracy—and that societal ailment will not be relieved until we start truly holding corporations accountable.
It’s no secret that this tax scheme is incredibly unpopular with people. Across a set of surveys, only 33 percent of Americans approved of this tax bill, while 52percent disapproved. And, more to the point, a whopping 76 percent of Americans don’t like the fact that it gives corporations a massive tax cut. So why would Republicans be so hell-bent on passing this scheme if it’s a nonstarter with the people?
Perhaps because the wealthy and corporate donors that bankroll their campaigns have demanded it? In June, big Republican donors started threatening to close their “piggy banks” if Republicans didn’t successfully repeal the Affordable Care Act. And now, even more GOP donors have dangled their piggybank in front of Republicans to ensure the passage of this tax scheme. And it worked—multiple Republicans reference these threats openly in the media and this tax scheme moved through Congress with speed usually reserved for national emergencies.
Clearly, the driving argument behind this tax plan—that it will stimulate the American economy—was just a front.
And it’s not just campaign donations behind this bill. According to the Center for Responsive Politics, in 2017, D.C. lobbyists launched a renewed push on tax reform. So let’s look what these lobbyists and donations secured for corporations and their shareholders:
Under our current tax regime, corporations had an effective tax rate of 18.6 percent,according to the Congressional Budget Office. But that was with both a corporate tax rate of 35 percent and a Corporate Alternative Minimum Tax (AMT) of 20 percent. This tax scheme will lower the tax rate to 21 percent and completely eliminate the AMT, which means corporations are going to reap massive dividends. In fact, the Center on Budget and Policy Priorities found that of the windfalls from the corporate tax cut, just over one third will go to the top 1 percent and most likely, with the massive contraction of the estate tax, stay there).
The bill also allows corporations to repatriate foreign profits and do so at an incredibly low cost. As George W. Bush witnessed after creating his own tax repatriation holiday, while corporations promised to create lots of new jobs, they pocketed the money, buying back shares and increasing the value of investors’ and executives’ holdings. This time around, corporations didn’t even wait until the tax bill had been signed. Since the Senate passed their tax bill on December 2nd, 29 companies declared a total of $70.2 billion in stock buybacks.
That’s a hard truth about this tax bill too. It puts profit first and people last. Ultimately, to correct this we have to kick corporations out from our democracy.
Clearly, the driving argument behind this tax plan—that it will stimulate the American economy—was just a front. In reality, it will simply line corporate and wealthy pockets while offering a meager (and temporary) tax cut for middle and low income earners. What really drove this tax plan was corporate interests.
Furthermore, the tax scheme will balloon the deficit. This will inevitably be used as an argument for the further weakening and destabilization of a whole host of government services—from environmental regulation and clean up to Medicare and Social Security.
While this may sound scary to you and me, what we have to remember is that failing to stimulate the economy and creating a deepening debt crisis may not actually be a problem to Republicans’ wealthy and corporate donors, but an additional boon.
Many investors and corporations have much to gain if the American government is starved of resources. In the moments of economic shock that inevitably will follow (whether politically driven like a debt crisis or triggered by climate-change fostered natural disasters), there will be opportunities to increase corporate profit and power even further.
For example, those that profit from privatizing government infrastructure will be poised to profit greatly in the coming decades. Some groups are already salivating. The National Association of Water Companies– which represents the interests of water privatization corporations– tweeted a few days ago: “As @EPA spending decreases loom, many cities & states are weighing their ability to provide clean #water. One solution? Private #water investment.”
And companies that profit off privatization are already circling like sharks. A recent article in the Baltimore Sun describes how water company Suez and its lobbyists have met with 14 of Baltimore’s 15 councilmen to convince them of the benefits of privatizing—and of giving Suez a 40-50 year lease to run their water system. But as Councilman Ryan Dorsey noted, “It’s obvious that if you’re looking to privatize infrastructure, your motive is profit….Privatization puts profits first and people last.”
That’s a hard truth about this tax bill too. It puts profit first and people last. Ultimately, to correct this we have to kick corporations out from our democracy.
That means getting corporate money out of politics, exposing the corporations pulling the strings of trade associations in Washington and around the world, and reining in corporate influence on policy-making—both in the U.S. and internationally.
These steps are essential if our democracy is to be of the people. Of course, changes this big will take significant political will, but after the abuses of this past year, people are ready for change and are taking action. While the tax bill as passed hands a gift to corporations, it also provides impetus for more and more people to join into our movements and campaigns for democracy and justice. That’s a big reason to hold onto optimism as we head into 2018.
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