APRIL 6, 2021
Meyerson on TAP
Biden, Wyden, and Yellen: Bring Investment Home!
The Democrats’ new proposals for taxing global corporations should enable them to address two distinct and pressing problems: how to expand the rule of law from the national level to the planetary; and how to win back a share of the working class that’s been moving into the Republican column.

For nearly half a century, America’s leading corporations have offshored both work (to lands where labor is cheap) and profits (to lands where tax rates are low). By so doing, they and their European counterparts have been able to end-run the worker rights and labor standards, and the taxes that fund them, that the nations of North America and Western Europe had been able, in their social democratic moments, to establish.

In short, big business went global before government did. This was not an unprecedented development. In the second half of the 19th century, railroads, steel companies, and meatpacking firms went national at a time when the federal government had no laws to regulate them, when government was largely confined to state and local entities that couldn’t cope with nationwide businesses. It took decades—arguably, not until the 1930s—for the federal government to enact national rules of the road.

We may now be at the moment when the governments of many nations agree on a common set of standards for the behemoths that dominate the global economy. At the European level, the EU has already enacted a light set of labor standards. Now, Treasury Secretary Janet Yellen is proposing that nations that belong to the OECD establish a global minimum tax for those corporations, so that they can’t direct their profits to such low-tax havens as Ireland, Luxembourg, or the Bahamas. Not accidentally, the Biden administration’s tax plans call for raising the corporate tax rate here to 28 percent, which is roughly the average tax rate of OECD members.

Just yesterday, moreover, three Senate Democrats—Ohio progressive Sherrod Brown, Oregon liberal Ron Wyden, and Virginia centrist Mark Warner—introduced a bill that aspires to tax offshore income at higher rates and provide benefits for companies that do their R&D and production here in the States (though parts of the Biden proposal may do this more effectively).

This is all popular stuff. Poll after poll has shown large majorities of Americans favor raising taxes on the rich and on big corporations, and the majorities on these issues are likely to grow even more lopsided as corporate tax evasion comes under a brightening spotlight. ITEP, the Institute on Taxation and Economic Policy, has released a study documenting that 55 corporations on the Fortune 500 paid no federal income tax last year on profits that came to roughly $40 billion. Twenty-six of those corporations have paid no federal income tax since the enactment of the Trump tax cuts in 2017; they include FedEx and Nike.

In their campaign for tax hikes to fund infrastructure and the caring economy, these are arguments that Democrats will surely highlight if their political synapses are firing at all. Since the advent of corporate offshoring in the 1970s, there have been no even remotely effective proposals to bring investment back home. The proposals by Biden, Wyden, and Yellen, and the funding for domestic R&D and manufacturing in the infrastructure bill, will, if enacted, actually do that—almost surely, over the opposition of a unified Republican Party.

So, the GOP votes against bringing investment home? I can’t think of a better way to arrest the drift of our working class into the Republican column.

Join the Prospect on Wed., April 14, at 7:00 pm ET, for a discussion on three topics from our most recent print issue: Climate change, corporate monopolies, and immigration during COVID.

Why Democrats Won’t Overturn Many Trump-Era Rules
The Congressional Review Act requires only a majority vote to nullify certain regulations. But the Democratic leadership lacked much urgency to tackle it. BY DAVID DAYEN
Making Industrial Policy Work
We need a smart and systematic process, not just pretty goals. BY ROBERT KUTTNER
How Workers Really Get Canceled on the Job
Pre-hiring personality screening and ongoing employer monitoring explicitly weed out workers likely to agitate for a union. BY NATHAN NEWMAN
First 100: Public Investment Can’t Be a Jackpot for Private Thieves
Plus, Senate Democrats find an extra way around the filibuster. BY DAVID DAYEN

Copyright (c) 2021 The American Prospect. All rights reserved.

Email Marketing by ActiveCampaign