“Tax Reform:” Just Another Giveaway to the Rich
Television ads are now running in support of an as yet unseen so-called tax reform bill. One of the ads focuses on a laid off blue collar worker. The laid off worker states that he lost his job due to foreign competition and that if the corporate tax code was lower, and more competitive, previously lost jobs would begin to return to the United States.
The notion that the corporate tax rate is the reason for U.S. corporations offshoring jobs is a false one. In the years following World II, the United States was the only major industrialized nation whose infrastructure remained intact, leaving no serious manufacturing competition.
Tax cuts do not create jobs
It would be decades before Europe and Japan would fully recover. And through those years, the United States would see a rise in union membership which, in turn, would create the great middle class. In fact, the percentage of workers belonging to a union in the U.S. peaked in 1954 at almost 35%. The total number of union members peaked in 1979 at an estimated 21 million.
As trade unionists we know that jobs are not enough to provide a decent standard of living, it takes good paying jobs.
Within 10 years of that 1979 peak, the cold war would end, and new markets would open. China, a communist country with a population of over one billion, would become a major trading partner. China, a country that was found to be using prison labor, was now a manufacturing competitor.
So, the idea that the U.S. corporate tax rate is the reason jobs are being shipped overseas, and by lowering it, jobs will come rolling back to the U.S., is simply a scheme to further line the pockets of rich stock holders of major corporations and boost the pay of CEOs.
According to the Institute on Taxation and Economic Policy (ITEP) a non-profit, non-partisan research organization, profitable Fortune 500 firms collectively pay far less than the 35% federal corporate tax rate. Two hundred and fifty-eight profitable Fortune 500 corporations paid an average effective tax rate of 21.2% on their U.S. profits over the eight years between 2008 and 2015.
Of the 258 profitable Fortune 500 companies the ITEP sampled:
• 18 paid ZERO in taxes over the full eight-year period
• 100 paid zero, or less, in at least one profitable year during the same period
• 58 of those companies had multiple zero-tax years
• 24 companies zeroed out their taxes in at least four of the eight years
• 48 companies paid a rate between 0 and 10% over eight years.
Another study blows apart the argument that tax breaks are directly related to job creation by reporting that:
• America’s 92 most consistently profitable tax-dodging firms registered median job growth of negative 1% between 2008 and 2016. The job growth rate over those same years among U.S. private sector firms as a whole, 6%.
• More than half of the 92 tax-avoiders, 48 firms in all, eliminated jobs between 2008 and 2016, downsizing by a combined total of 483,000 positions.
Don’t believe the hype
House Speaker Paul Ryan wants to cut the current 35% rate to 20%, and President Trump wants to cut it to 15%, with the argument it will create jobs. Don’t buy it. The facts speak for themselves.
Collectively, American businesses are currently sitting on $1.9 trillion in cash. Giving them more money to sit on won’t create a single job. Long before Donald Trump ran for President, the UWUA advocated for the rebuilding of our infrastructure. One only need look at our 2015 convention theme: Reclaim, Retrain, Repair, Repower America! We can’t rebuild America by making the rich richer and shrinking the U.S. Treasury.