Fair Tax Solutions for Cities Facing Covid-19 Budget Crises
Local policymakers are facing pressure to make painful spending cuts. Instead, they should raise taxes on corporations and the wealthy.
As President Trump begins a barn-storming tour to tout his tax plan, we’ve released a short video rebutting some of the most common Republican myths about corporate tax cuts.
Trump has claimed that we’ll “see a rocket ship” once his tax plan is adopted — that’s just how much he wants us to believe the economy will take off.
But as predicted, the plan he and congressional Republican leaders released on September 27 would primarily benefit the wealthy and big corporations. For the rest of us, it would be a dud.
On the corporate side, the video shows Trump claiming that slashing the federal tax rate from 35 percent to 20 percent will lead to huge numbers of new U.S. jobs. Many researchers have dispelled this myth, including the U.S. Federal Reserve, the Economic Policy Institute, and the Center on Budget and Policy Priorities.
At the Institute for Policy Studies, we recently took a novel approach by analyzing the 92 U.S. publicly held corporations that paid an effective tax rate of less than 20 percent from 2008-2015. What we found is that overall these tax-dodging firms had median job growth of negative one percent, compared to a six percent employment increase among U.S. private sector firms as a whole. Not surprisingly, we found that some of the proceeds from this tax savings were winding up instead in higher-than-average pay for their CEOs.
The video also rebuts the president’s claim that U.S. corporations pay more in taxes than firms in other globally competitive countries. Because of all the loopholes in the U.S. tax code, government revenue from corporations is actually lower in the United States than the average for industrialized countries. And the new Republican plan gives very little detail on what loopholes they might close. At the same time, the plan offers huge new tax breaks to corporations, including allowing multinationals to pay little-to-no taxes on the profits they book offshore.
In short, Trump’s tax cuts would be like a rocket ship — but only for big corporations and the 1%. For ordinary Americans, it would mean deep cuts to Medicare, Society Security, and other services.
As he travels around the United States, let’s hope Trump hears from the majority of Americans who reject the “trickle down” theory that tax cuts grow the economy and create jobs. It’s time for the wealthy and big corporations to pay their fair share.
Sarah Anderson directs the Global Economy Project and co-edits Inequality.org at the Institute for Policy Studies. @Anderson_IPS
This video was produced by Victoria Borneman, the Saul Landau Multimedia Fellow at the Institute for Policy Studies.
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