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Politics Opinion: Jeff Bezos is right about raising taxes

03:55  08 april  2021
03:55  08 april  2021 Source:   cnn.com

Jeff Bezos comes out in support of increased corporate taxes

  Jeff Bezos comes out in support of increased corporate taxes As the White House considers raising taxes on corporations for the first time in more than 25 years, the head of one of America's largest companies is backing such a plan. © Phillip Faraone/Getty Images/FILE SAN FRANCISCO, CA - OCTOBER 15: Jeff Bezos attends WIRED25 Summit: WIRED Celebrates 25th Anniversary With Tech Icons Of The Past & Future on October 15, 2018 in San Francisco, California. (Photo by Phillip Faraone/Getty Images for WIRED25 ) Amazon CEO Jeff Bezos said in a statement Tuesday that the company is "supportive of a rise in the corporate tax rate.

Jeff Bezos has garnered headlines again for his comments on Amazon's taxes. This time it comes with a twist. Bezos is not defending Amazon against charges leveled by the likes of Sen. Elizabeth Warren over Amazon's less-than-zero federal taxes in 2018. (In 2019, the company paid slightly more than 1% of its profits in taxes.)

Jeff Bezos wearing a suit and tie: Blue Origin founder Jeff Bezos speaks after receiving the 2019 International Astronautical Federation (IAF) Excellence in Industry Award during the the 70th International Astronautical Congress at the Walter E. Washington Convention Center in Washington, DC on October 22, 2019. (Photo by MANDEL NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images) © Mandel Ngan/AFP/Getty Images Blue Origin founder Jeff Bezos speaks after receiving the 2019 International Astronautical Federation (IAF) Excellence in Industry Award during the the 70th International Astronautical Congress at the Walter E. Washington Convention Center in Washington, DC on October 22, 2019. (Photo by MANDEL NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images)

Rather, the world's richest man is endorsing -- albeit without a lot of specificity -- the Biden administration's plan to increase the corporate tax rate and close down many of its loopholes to pay for a massive investment in America's infrastructure.

What Matters: Taxes will have to go up for someone

  What Matters: Taxes will have to go up for someone The US is entering a weird place where even some big money execs -- the kinds of people who usually build businesses by doing everything they can to avoid paying federal taxes -- agree the government needs to raise funds to keep things rolling. © shutterstock Now, like a family with a calculator at the kitchen table going over its bills, American policymakers and business leaders are slowly coming around to the most obvious mathematical truth: Companies will need to shell out funds if they want the government to invest in President Joe Biden's goal of bringing the nation's infrastructure up to scratch.

That's good news for us non-billionaires.

Biden knows his history. Democratic presidents have not fared well when increasing taxes. Bill Clinton raised tax rates in 1993. Although the increased revenue from higher individual and corporate taxes helped spur a recovery, Democrats got hammered in the subsequent midterm election that swept Newt Gingrich into power and gave the House to Republicans until 2006.

And then the perception that the Affordable Care Act, known as Obamacare, was some kind of tax increase led to an even greater pummeling the next time the Democrats held the House, in the 2010 midterm that ushered in the tea party and blocked the Obama-Biden legislative agenda for the next six years.

This time, out of the chute and needing funds for a host of long-deferred infrastructure projects, the Biden administration has put a laser focus on corporate tax revenues.

Premarket stocks: CEOs like Jeff Bezos are grappling with new political realities

  Premarket stocks: CEOs like Jeff Bezos are grappling with new political realities The political forces governing Washington have changed dramatically this year, with Democrats in control of both the White House and Congress. That's forcing some of the country's most powerful corporations to rethink their approach to contentious policy debates. © Mandel Ngan/AFP/Getty Images Blue Origin founder Jeff Bezos speaks after receiving the 2019 International Astronautical Federation (IAF) Excellence in Industry Award during the the 70th International Astronautical Congress at the Walter E. Washington Convention Center in Washington, DC on October 22, 2019.

And so it should. Wages have been stagnant for decades. But corporate stock returns have not languished -- they have grown explosively. In the first three years of the Trump administration, wages rose 9%; the S&P 500 rose 42%. If we roll the clock back to 1964, the numbers become 852% for wages, unadjusted for inflation, versus 4,116% for stocks. Over decades, wealth has been beating wages by more than four times.

What about tax policy? Ever since World War II, the American tax system has been increasing its burden on workers, they of the stagnant wages, and lowering it on corporations, those of the explosive growth. Former President Donald Trump's one major legislative accomplishment, the Tax Cut and Jobs Act of 2017, was overwhelmingly a corporate tax cut.

If we go back to 1964, we see America's "Big Three" of taxes -- the individual income, corporate income and Social Security/payroll taxes -- combining to amount to 14.3% of America's GDP. In 2019, the most recent year for which we have full records, the total was 15.1%, a slight increase in the total sum.

Why some of the most liberal Democrats in Congress want to bring back a tax break for the rich

  Why some of the most liberal Democrats in Congress want to bring back a tax break for the rich Democrats want to raise taxes. So why are they debating cutting them for some well-off taxpayers?In their 2017 tax bill, Republicans partially closed a tax loophole that mainly affected higher-income people in high-tax areas — i.e., relatively well-off people in blue states. They capped the state and local tax deduction (SALT) people can take when calculating their federal income tax at $10,000. People can still deduct state and local taxes from their federal tax bill, but only up to that point.

But if we focus on the composition of the Big Three taxes, we see a more dramatic story. Individual income taxes have gone up, from 7.4 to 8.1% of GDP. Payroll taxes, the most regressive of the lot, have skyrocketed, from 3.3 to 5.6%. Corporations? These big time winners from economic growth have seen their taxes as a percent of GDP plummet, from 3.6 to 1.1%.

Corporate income taxes, which provided just about 40% of federal revenue in 1943, now account for only about 7% of total federal dollars; the individual income and payroll taxes, combined, come in at 86%. In sum, America is taxing work, not wealth, adding to the burdens that life is placing on our middle class.

The Biden plan is smart. It doesn't just raise the corporate tax rate -- the proposal is to increase it to 28% from its current 21%, still below the 35% it was prior to the Trump cuts -- but also does what the TCJA failed to do: close loopholes. The Biden plan seeks a global minimum corporate tax rate, backed up by denying US tax deductions to companies operating in low-tax jurisdictions.

It attempts to shut down "inversions" whereby American companies become children of corporate "parents" located offshore. It attacks accounting tricks by imposing a minimum tax on a corporation's book value. These are highly technical matters that would have a beneficial effect: it would make companies like Bezos' Amazon pay something.

Hillicon Valley: Intel heads to resume threats hearing scrapped under Trump | New small business coalition to urge action on antitrust policy | Amazon backs corporate tax hike to pay for infrastructure

  Hillicon Valley: Intel heads to resume threats hearing scrapped under Trump | New small business coalition to urge action on antitrust policy | Amazon backs corporate tax hike to pay for infrastructure Welcome to Hillicon Valley, The Hill's newsletter detailing all you need to know about the tech and cyber news from Capitol Hill to Silicon Valley. If you haven't already, be sure to sign up for our newsletter by clicking HERE. Welcome! Follow our cyber reporter, Maggie Miller (@magmill95), and tech team, Chris Mills Rodrigo (@chrisismills) and Rebecca Klar (@rebeccaklar_), for more coverage.The House and Senate Intelligence panels will hold hearings to examine worldwide threats, including those in the cyber and technology spaces, next week after a two-year gap.

There's a time for everything, including to tax and spend. Jeff Bezos gets it. Wall Street does, too; Goldman Sachs and others have come out with tepid endorsements or at least muted criticisms of the proposed tax hike.

Most congressional Republicans will still cry wolf, because that is the nature of congressional Republicans. But the wolves of Wall Street know better. If taxes are the price we pay for a civilized society, as Oliver Wendell Holmes once put it, it is well past time to get the richest corporations in the history of civilization to pay some fair share of them, before our civilization crumbles and collapses. Even the man with the most to lose agrees.

a man wearing glasses and looking at the camera: Edward J. McCaffery © Provided by CNN Edward J. McCaffery

online retailer: Amazon chief Bezos speaks for higher corporate taxes from .
Amazon is under pressure in the US. Now CEO Jeff is commented and advocates higher taxes. But he warns a "balanced solution" for companies. © DPA Amazon is under pressure: US President Biden had recently been to online giants in a speech than one of the companies using legal loopholes to avoid tax payments. The World's Greatest Online Dealer Amazon has long been due to tax avoidance in criticism, now excludes corporate chief Jeff Bezos for higher levies.

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This is interesting!