‘Grave Mistake’: Yellen Under Fire for Opposing Global Billionaires Tax / by Jon Queally

_{^{U.S. Treasury Secretary Janet Yellen speaks during a press conference on June 5, 2021 in London, England | Photo: Justin Tallis–WPA Pool/Getty Images}}

“To reject the very idea of a global minimum tax on billionaires is to cede control of our economies and our democracies to oligarchs and plutocrats,” warned one progressive critic over the U.S. Treasury Secretary’s position.

_{Reposted from Common Dreams}

U.S. Treasury Secretary Janet Yellen is being taken to task by progressive critics after coming out Monday in opposition to a proposed global tax on billionaires at an upcoming Group of 7 nations meeting where the measure is on the agenda.

Speaking to the Wall Street Journal, Yellen told the newspaper that while the Biden administration broadly supports more progressive taxation, in which those at the top of the income and wealth scale pay higher rates, the U.S. will not back a plan—put forth by Brazil and backed other G20 leaders earlier this year—that would set a minimum international rate for the planet’s ultra-wealthy.

In her remarks, Yellen said the “notion of some common global arrangement for taxing billionaires with proceeds redistributed in some way—we’re not supportive of a process to try to achieve that. That’s something we can’t sign on to.”

The proposed 2% global tax on the assets of the world’s billionaires, backers of the idea argue, would be a way to curb the international race to the bottom on taxation by hampering the ability of those with vast fortunes to move their money from bank to bank and nation to nation as a way to avoid paying their fair share into public coffers.

The EU Tax Observatory, which helped formulate and backs the proposal, estimates that the 2% levy on the billionaires would raise $250 billion in annual revenues.

Given President Joe Biden and Yellen’s support for a global minimum corporate tax and recent political messaging on the need to compel corporations and the wealthiest to pay higher taxes domestically, Morris Pearl, chair of the advocacy group Patriotic Millionaires, said opposition to a global billionaire tax was confounding.

“We are mystified by Secretary Yellen’s comment suggesting she has rejected the G20 proposal for a global minimum tax on billionaires,” Pearl said. “Her comment is starkly at odds with President Biden’s stated goal of compelling billionaires to pay their fair share; it is at odds with the growing consensus on taxing the ultra-wealthy; and it is at odds with her own history of being a champion of international cooperation on tax matters.”

Successful implementation of a billionaires tax, reports the WSJ, “would allow countries to raise more in tax revenue to finance other priorities and use the tax code to reduce income inequality, which has widened sharply in recent decades.”

Floating the idea back in January, Brazil’s Finance Minister Fernando Haddad said, “In a world where economic activities are increasingly transnational, we have to find new and creative ways to tax these activities [and] thus direct the revenues to common global endeavors such as ending hunger and poverty and fighting climate change.”

According to Pearl:

Secretary Yellen’s statement seems to stem from concerns that the revenue from such a tax would be”redistributed.” However, the proposal would not institute a global tax that is then globally redistributed. The blueprint for this proposal is the OECD agreement for a global corporate minimum tax that she herself championed, which enables individual governments to determine how the taxes collected within their borders are spent.

If her concerns are simply about redistribution, she should clarify that ahead of her meetings later this week. But to reject the very idea of a global minimum tax on billionaires is to cede control of our economies and our democracies to oligarchs and plutocrats. In short, a wholesale surrender to the political influence of the ultra-rich would be a grave mistake.

Oxfam International calculated earlier this year that a 5% wealth tax targeting multimillionaires and billionaires in G20 countries could raise around $1.5 trillion a year in revenue globally. Such funds, the group said, would be “enough to end global hunger, help low- and middle-income countries adapt to climate change, and bring the world back on track to meeting the United Nations’ Sustainable Development Goals (SDG)—and still leave more than $546 billion to invest in inequality-busting public services and climate action in G20 countries.”

Over the weekend, economist Gabriel Zucman, one the key architects behind the billionaires tax proposal put forward by Brazil, said “the super-rich will fight” such measures “tooth and nail,” but “yes—we will have, one day, a coordinated minimum max on the super-rich. And perhaps sooner than you think!”

If he’s correct, it doesn’t look like Secretary Yellen or President Biden have received the memo.

_{Jon Queally is managing editor of Common Dreams}

Extending Trump Tax Cuts Would Add $4.6 Trillion to Deficit: CBO / by Jessica Corbett

_{^{Former U.S. President Donald Trump speaks at the Conservative Political Action Conference at the Gaylord National Resort Hotel And Convention Center on February 24, 2024 in National Harbor, Maryland | Photo: Anna Moneymaker/Getty Images}}

“We can’t afford 10 more years of giveaways to the wealthy and corporations and fail to invest in the people who drive our economy,” said the head of Groundwork Collaborative. “This tax law should expire.”

_{Reposted from Common Dreams}

As former U.S. President Donald Trump and congressional Republicans campaign on extending their 2017 tax cuts if elected in November, a government analysis revealed Wednesday that doing so would add $4.6 trillion to the national deficit.

When Trump signed the Tax Cuts and Jobs Act during his first term, the initial estimated cost was $1.9 trillion. Last year, the Congressional Budget Office (CBO) projected that extending policies set to expire next year would cost $3.5 trillion through 2033.

The new CBO report—sought by U.S. Senate Budget Committee Chair Sheldon Whitehouse (D-R.I.) and Senate Finance Committee Chair Ron Wyden (D-Ore.)—says continuing the income, business, and estate tax cuts will now cost $4.6 trillion through 2034.

“The Republican tax plan is to double down on Trump’s handouts to corporations and the wealthy, run the deficit into the stratosphere, and make it impossible to save Medicare and Social Security or help families with the cost of living in America.”

Responding in a statement Wednesday, the senators cited an Institute on Taxation and Economic Policy (ITEP) estimate that “extending the Trump tax cuts would create a $112.6 billion windfall for the top 5% of income earners in the first year alone.”

They also slammed their GOP colleagues, who Whitehouse said “are awfully eager to shield their megadonors from paying taxes.”

He recalled that just last year, “Republicans held our entire economy hostage,” refusing to raise the debt ceiling and risking the first-ever U.S. default, because they didn’t want the Internal Revenue Service to get more funding to “go after wealthy tax cheats.”

“Remember the Trump tax scam cutting taxes for billionaires and big corporations,” Whitehouse continued. “Now they’re set on extending those tax cuts, even though it would blow up the deficit. The Trump tax cuts were a gift to the ultrarich and a rotten deal for American families and small businesses. With their impending expiration, we have a chance to undo the damage, fix our corrupted tax code, and have big corporations and the ultrawealthy begin to pay their fair share.”

Wyden similarly took aim at the GOP, warning that “the Republican tax plan is to double down on Trump’s handouts to corporations and the wealthy, run the deficit into the stratosphere, and make it impossible to save Medicare and Social Security or help families with the cost of living in America.”

“Republicans have planned all along on making Trump’s tax handouts to the rich permanent, but they hid the true cost with timing gimmicks and a 2025 deadline that threatens the middle class with an automatic tax hike if they don’t get what they want,” he argued. “In short, they’re focused on helping the rich get richer, and everybody else can go pound sand. Democrats are going to stand by our commitment to protect the middle class while ensuring that corporations and the wealthy pay a fair share.”

Groundwork Collaborative executive director Lindsay Owens also responded critically to the CBO report, saying Wednesday that “extending Trump’s tax law and effectively subsidizing corporate profiteering and billionaire wealth is a nonstarter.”

“This tax law, on top of decades of failed trickle-down cuts, has come at the expense of workers and families,” Owens stressed. “We can’t afford 10 more years of giveaways to the wealthy and corporations and fail to invest in the people who drive our economy. This tax law should expire.”

While some of the tax cuts in the 2017 law are temporary—unless they get extended—the legislation permanently slashed the statutory corporate tax rate from 35% to 21%. As Common Dreamsreported last week, a new ITEP analysis shows that tax rates paid by big and consistently profitable corporations dropped from 22% to 12.8% after the law’s enactment.

_{Jessica Corbett is a senior editor and staff writer for Common Dreams}

Reports Expose Deep Harms of Corporate Tax Cuts and ‘Trickle Down’ Ideology / by Jake Johnson

_{^{President Ronald Reagan pictured speaking at a fundraiser | Photo: Dirck Halstead/Getty Images}}

“Failing to reimagine a more ambitious and comprehensive use of corporate tax policy prevents us from achieving a more equitable, sustainable, and democratic economy.”

_{Reposted from Common Dreams}

Two new reports published Tuesday by the Roosevelt Institute argue that robust corporate taxation is key to creating a strong economy and improving the well-being of families and children—objectives that have been undermined in the decades since the Reagan era by regressive tax cuts enacted on the false premise that benefits would “trickle down” to the rest of society.

The first report, A Mapping of the Full Potential of U.S. Corporate Taxation to Enhance Child and Family Well-Being, examines what the authors describe as the understudied notion that “increasing corporate taxation will necessarily help children and families by providing additional revenue for essential public services.”

That perspective runs counter to what the Roosevelt Institute’s second report calls “a ‘cut-to-grow’ mentality” that rose to prominence in the 1970s and was enthusiastically embraced by the administration of President Ronald Reagan.

“Under this view, the thinking went, it was necessary to reduce the corporate tax rate to grow the economy—and that this growth would allow gains to eventually ‘trickle down’ from the rich shareholders to the middle class,” the report states. “During this time, the corporate tax rate was gradually reduced to 35% before it was dramatically cut to 21% in 2017. These cuts resulted in corporate tax revenues falling to less than 10% of total federal revenues.”

“Perhaps more than any other, President Ronald Reagan leveraged mounting backlash to taxation and government spending to dramatically reduce both, regardless of the consequences to American families,” the report observes.

“Corporate tax policy since Reagan has been driven by the trickle-down economics narrative that cutting the taxes on ‘job creators’ will benefit less wealthy U.S. taxpayers.”

The decades-long decline in corporate tax rates has severely undermined the federal government’s ability to finance critical public goods, from education to childcare.

“Since regressive corporate tax cuts don’t significantly increase earnings for working families (through either wage or employment increases), but they do reduce the government’s ability to fund family income and care supports, childcare costs—which are already rising—can become a relatively more expensive line item in working parents’ household budgets,” reads the Roosevelt Institute’s first report, authored by Emily DiVito and Niko Lusiani.

“When they can’t afford childcare,” they added, “parents face the difficult choice of having to cut costs in other places—often on the basic necessities that allow children to thrive, like food, clothing, and enrichment activities—or taking on additional caregiving duties themselves.”

At the state and local levels, DiVito and Lusiani noted, “corporations’ successful efforts to avoid their full property tax liability devastate public school budgets.”

DiVito, deputy director for the corporate power program at the Roosevelt Institute, said Tuesday that “we have a false idea in the U.S. that corporate tax policy is unrelated to equitable social reforms.”

“However, strong corporate tax policy is vital to all aspects of a thriving economy,” she argued. “And the failing to reimagine a more ambitious and comprehensive use of corporate tax policy prevents us from achieving a more equitable, sustainable, and democratic economy and society for all families.”

The new reports come a week after a bipartisan pair of House and Senate negotiators announced a deal to expand the child tax credit (CTC) for three years in exchange for a series of corporate tax cuts. The American Prospect‘s David Dayen estimated that “in the time period when all the tax credits are actually in place, the business tax changes are five times more costly than the CTC changes.”

“Who knows if this deal can pass in time to take effect in the upcoming 2023 tax season, if ever. Sen. Mike Crapo (R-Idaho), the ranking Republican on the Senate Finance Committee, is already asking for changes to make it even more generous to businesses. That’s in part a function of the dissembling that there is ‘parity’ in the deal. The truth is that this is not an equal trade. And it may extend that inequity well into the future.”

That warning is in line with the Roosevelt Institute’s new research, which argues that a corporate tax code generous to big business fuels inequality by “benefiting capital interests (i.e., business owners, partners, and shareholders) at the expense of workers and their families.”

“When corporations enjoy low taxes on their profits, they face a trade-off for how to otherwise disperse them: make investments in the workforce and productive capacity (e.g., raise wages, hire more workers, and/or upgrade buildings, equipment, or technology) or distribute them to shareholders (i.e., pay out dividends and buy back stock to inflate prices). Data shows that executives typically choose the latter.”

Reuven S. Avi-Yonah, a professor of law at the University of Michigan and the lead author of the new report on “cut to grow” ideology, said in a statement that “corporate tax policy since Reagan has been driven by the trickle-down economics narrative that cutting the taxes on ‘job creators’ will benefit less wealthy U.S. taxpayers.”

“Such an idea is often offered in tandem with the notion that this is the only way tax policy can help American families,” said Avi-Yonah. “But this just isn’t true. In fact, this false ‘cut-to-grow’ narrative has made it very difficult to argue for a more expansive, progressive vision of corporate tax reform—contributing to a decades-long stalemate in efforts toward real comprehensive corporate tax reform.”

“Now is the time,” he added, “to reverse this trend with a more historically grounded support of the corporate tax.”

_{Jake Johnson}_{is a senior editor and staff writer for Common Dreams.}

Senate Budget Chair Rips GOP Deficit Hawks Over Trillions in Tax Cuts for Rich / by Jake Johnson

_{^{U.S. Sen. Sheldon Whitehouse attends a hearing in the Hart Senate Office Building in Washington D.C. on December 5, 2023 | Photo: Celal Gunes/Anadolu via Getty Images}}

_{Reposted from Common Dreams}

“If not for the Bush tax cuts, their extensions, and then the Trump tax cuts, the U.S. debt-to-GDP ratio would be declining indefinitely,” wrote Sen. Sheldon Whitehouse.

The Democratic chair of the Senate Budget Committee rebuked his Republican colleagues on Thursday for demanding action to reduce the U.S. debt after adding roughly $10 trillion to it with tax cuts for the rich and large corporations.

Sen. Sheldon Whitehouse (D-R.I.) was responding to a letter he received earlier this week from Republican members of the budget committee, who criticized the chair for dedicating “significant time and attention to climate issues” while purportedly neglecting “the impending budgetary and fiscal crisis facing our nation.”

In a written reply, Whitehouse noted that “if not for the Bush tax cuts, their extensions, and then the Trump tax cuts, the U.S. debt-
to-GDP ratio would be declining indefinitely.”

The Bush administration’s decision to launch the so-called “war on terror”—which received bipartisan support in Congress—also cost the U.S. upwards of $8 trillion, Brown University’s Costs of War project has estimated.

Whitehouse described Republicans’ proposed solutions, such as their balanced budget plan , as “magical thinking,” pointing to the Congressional Budget Office’s recent conclusion that the GOP push to balance the federal budget within the next decade would not be possible without cuts to Social Security and Medicare—programs that are currently in the right-wing party’s crosshairs.

“That wild notion would zero out all other federal spending and still not completely eliminate the deficit,” Whitehouse wrote, observing that the GOP balanced budget plan would require the elimination of Medicaid, federal nutrition assistance, and other critical programs.

“Some billion-dollar corporations pay no income taxes at all. When you are willing to engage seriously with this problem, let me know.”

Whitehouse also defended his decision to focus a significant portion of the committee’s work on climate, arguing that “the next fiscal emergencies will be climate-related, and similarly disastrous for the federal budget, with cascading economy-wide ‘systemic risks.'”

The U.S. has faced at least 23 billion-dollar extreme weather disasters this year, according to the National Oceanic and Atmospheric Administration. Democrats on the Senate Budget Committee are currently investigating the climate-induced insurance crisis.

“We presented testimony from leading bankers, insurance CEOs, top corporate advisory firms, mortgage lenders, and scientists about these risks; you responded mostly with mockery, climate denial, and fringe witnesses on the fossil fuel payroll,” Whitehouse wrote Thursday.

The Democratic senator’s exchange with his GOP counterparts came as Republicans and some Democrats are demanding a “fiscal commission” to craft legislative changes to the nation’s trust fund programs, which the GOP has characterized as key contributors to the national debt. (Social Security is not a driver of federal deficits.)

Critics warn the fiscal commission would be a Trojan horse for Social Security and Medicare cuts.

Whitehouse and other congressional Democrats have proposed legislation that would extend Social Security’s solvency for more than 75 years by raising taxes on the wealthy. Republicans, for their part, have called for raising the retirement age while working to shield rich tax dodgers.

“As we all know, the tax system is corrupted by special interests, and million-dollar earners can pay lower tax rates than plumbers and firefighters,” Whitehouse wrote Thursday. “Some billion-dollar corporations pay no income taxes at all. When you are willing to engage seriously with this problem, let me know. There is a revenue side to the deficit problem, and we can correct injustices at the same time.”

_{Jake Johnson is a senior editor and staff writer for Common Dreams.}