Back in 1952, the federal government got a third of it’s revenue from corporate taxes.
Now there are a lot of reasons to not feel nostalgic about the 1950’s. The Cold War. McCarthyism. Racial segregation. Limited choices and opportunities for women.
But one thing no one can dispute about the 1950’s was that the economy was booming.
Back then, a white guy could graduate from high school, get a job and buy a new car. In a few years, he could marry a woman who would never enter the workforce, put a down-payment on a starter home in the suburbs, and prepare to raise 2.4 kids on a single income.
A lot of Trump supporters feel nostalgia for this era. And I get it. Millennials with college degrees are living in their parents’ basements, doing unpaid internships. Two income families string together a half a dozen part-time jobs and still need food stamps to feed their kids.
A significant portion of the American dream has disappeared. That part where you work hard and get ahead. It’s just not an available option for a huge percentage of the population.
And Trump promised to “make America great again.” To bring back those jobs. To bring back that American dream.
I promised you fun with corporate tax breaks. Let’s see if either of us is going to keep our promise.
We are preparing for the big roll out of the national budget that Republicans promise is going to bring back our jobs.
The cornerstone of the plan is a huge cut in the corporate tax rate. US corporations pay, the Republicans will tell us, the highest corporate tax rate in the world. That is why we don’t have good jobs anymore. If only the corporations were relieved of their tax burden, they would be able to create more jobs. And then all of us could return to that nostalgic American dream.
So back in 1954, corporate taxes made up 33% of the federal budget.
Take a guess what percentage of the national budget corporate taxes make up now. Go ahead. Think of a number.
Well, in recent years, corporate taxes have represented between 9% and 12% of the national budget.
Let that sink in.
Now about 97% of the national budget’s revenue comes from taxes. Corporate taxes and income taxes. So if you are a worker, (as opposed to a corporation), that means you are shouldering a much bigger percentage of the the budget. The budget that pays for big things, like schools and wars and infrastructure and the national debt. And smaller things, like food stamps and and NASA and National Parks. And tiny budget lines, like Meals on Wheels and adult literacy classes and afterschool programs.
So. The Republican budget solution is to cut the corporate tax rate.
Just to recap. Back when the economy was booming, and we enjoyed an abundance of good, high paying jobs, the corporations that employed those workers paid about 33% of the national budget. And today, when no one graduates from high school, gets a job, and puts a down payment on a house, when millions of workers are stringing together multiple part time jobs, working at unpaid internships, and buying stuff that was manufactured by someone in Bangladesh or China or Indonesia, (someone who the corporations pay $2 an hour) US corporations are paying a third of what they paid back then.
And the solution is to cut corporate taxes.
Here is the fun part. You’re going to like this. Not only is the percentage of the national budget which is financed by corporations decreasing, but an increasing percentage of the budget actually goes directly to corporations in the form of subsidies. We call it corporate welfare. On top of that, over the years, tax laws have changed to benefit large corporations. They have changed so drastically, that no corporation pays that mythical 30%. In fact, many corporations pay NOTHING in federal taxes.
Here is a list of corporations that, according to the Institute on Taxation and Economic Policy (ITEP), paid $0 in taxes between 2008 and 2015.
American Electric Power
The energy companies are the big winners on this particular list. But thanks to the lobbying power of corporate interests, all corporations are winners these days.
However, there are some corporations that are still paying taxes. And the Republicans would like to relieve their burden.
And that means that working people will be making up the difference. We are going to be financing an even larger percentage of the budget, during this era of increased military spending and border walls and trips to Mar-a-Lago. And we will just have to live with cuts to everything from local community centers to bridge repairs. And education. And science. And social services. And the arts. And infrastructure. And innovation. And maybe healthcare and social security. But that is another story.
If you are a stockholder, these tax breaks will increase the value of your portfolio. Because these cuts will mean even more corporate profits. So you get to have fun.
But historical data has demonstrated that these cuts will not translate into any significant job growth.
So we can look back on the affluence of 1952 with nostalgia. And like many Trump supporters, we can blame people of color and women and immigrants and food stamp recipients and after school programs for stealing our American Dream. That is what the corporations really want us to do.
But you need to think about what you want. Because a vote is coming up, and these cuts may soon become a reality.
Contact your elected representatives in Congress. Let them know what you think.
If your stock portfolio is your priority, then tell them that you want huge corporate tax cuts.
If you are more interested in jobs and infrastructure and education and parks and science and community development and safety net programs and your own tax liabilities, then tell them to vote no on the proposed corporate tax cuts.