Q&A with a Nebraska voter: Alisha asks: Dear Mr. Buhrdorf, I met you a few weeks ago on the street while I was circulating a petition for minimum wage. I have discussed and shared your goals as well as that of the Tax Wall Street Party with some friends. We very much agree with your strides to better the American people, however, we do have one concern, and I was wondering if there was a solution for it. Right now many corporations are outsourcing their money because they dont want to be taxed at 26% in the United States. The concern is that taxing Wall Street will cause a surge in larger sums of outsourcing. Is there anything within this campaign that will prevent this from happening? Dear Alisha, Thanks for taking the time to write, and thank you for your good work in fighting to raise the minimum wage, an effort which I certainly support. This is a question that comes up a lot, and while Im not running on a detailed program for tax reform, Id come at it from a few different angles. 1. Corporate income tax hurts small businesses, not large ones. I doubt that corporate taxes are among the key reasons for offshoring jobs. As you know, the largest corporations make the most use of loopholes and tax avoidance, and often pay zero corporate income tax. For example, Whirlpool, the worlds largest appliance manufacturer, had negative effective tax rates in 2008, 9 and 10, meaning they paid nothing to the US government and were refunded $64 million in 2010. Despite this, they have offshored the majority of their manufacturing jobs to Mexico, where workers are paid a fraction of now-unemployed American workers in Whirlpools shuttered factories in places like Benton Harbor, MI and Evansville, IN. A corporate income tax is payed only on profits which are not distributed as income or capital gains (a dubious distinction) to employees and shareholders. This is indeed a drain on smaller businesses who need to build cash reserves from one year to the next to pay employees and expenses, and I would be interested to hear ideas to create tax protection for this purpose. 2. Wall Street does not invest – it gambles! Companies like Whirlpool have become a shell for Wall Street speculation. Whirlpool provides some white-collar jobs, but is essentially a vehicle for big mutual and equity funds (think Prudential, BlackRock, etc.) to bid its stock price up and down, and skim off profits with high-frequency trading. The two purposes of a Wall Street Sales Tax are: 1) to redirect a small percentage of ill-gotten profits into the public treasury, and 2) to create an incentive to INVEST in building businesses, rather than to gamble on price fluctuations, arbitrage (instantaneous buy low/sell high schemes where the trader profits from others lack of knowledge), and predatory derivatives, like the credit default swaps and mortgage-backed securities that brought down the housing market. All these latter activities need to either be banned or reined in, whereas real capital investment needs to be encouraged. 3. A thumbnail sketch of a fair policy of taxes and incentives – carrots and sticks If we want to follow the historical examples that led to Americas periods of great growth, we can pursue neither unbridled, free market capitalism NOR a socialist smothering of private enterprise. Contrary to the Republican view of the primacy of capital (Wall Street speculators), we DO need our corporations to provide public benefit – useful goods and services, employment at a living wage, respect for union rights, clean air, water, etc. But contrary to what is too often the progressive view, we cant simply view corporations as enemies from which demands are to be endlessly extracted from people who do not contribute to those corporations. We need to protect and promote our industries, family farms and other small businesses. If we want good jobs, we must be willing to provide public support: • A protective tariff to tax the importation of cheap goods and services. • A parity price to put a living wage under our farmers, and to rescue them from Wall Street futures contracts. • An active policy of export credit to encourage high-tech, high wage exports to the developing world (Both reactionary Republicans and progressives are working to end FDRs Export-Import Bank). • Full funding for national laboratories, where research into industrial processes, environmental remediation, etc. can be carried out at low cost to corporate users. • A Wall Street Sales Tax to redirect private capital into productive investment. Beyond this, there are arguments to be made about things like: closing certain corporate tax loopholes; ending the distinction between income, capital gains and carried interest; making income tax rates more progressive; removing the payroll tax cap to protect Social Security, etc. My core argument is this: Wall Street CAN be forced to serve a useful purpose, as it did under the founding and guidance of Americas first Treasury Secretary Alexander Hamilton. But left to its own devices it becomes a casino that provides no benefit and many costs to the American people. We cant let the day-to-day fluctuations of 401ks determine the future possibilities for America. We need to create a legal and regulatory environment that encourages the things we want (including profitable industries, farms and small businesses) and discourages the things we dont (including free trade and financial speculation). We hope this helps!
Posted on: Wed, 23 Jul 2014 12:33:57 +0000
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