Making policy–passing laws–requires a series of decisions. It begins with (and is often stymied by failure to reach) an agreement on the existence, nature and extent of the problem to be solved. When lawmakers do see the same problem, and agree on why something is a problem, they then have to come to some consensus on what action is needed to solve or ameliorate that problem. Then–in our age of “privatization”–they need to determine who should enforce the agreed-upon remedy. Should those empowered to deliver the new service or oversee compliance with the newly-passed regulation be government employees, or should that obligation be vested in the private or non-profit sector?
And finally, once the problem has been identified, a solution agreed upon, the means of enforcement determined, and the law passed, a sound policy process will vet how the new law performs–evaluate its effectiveness in actually addressing the original problem, and noting–and ideally correcting–any negative unanticipated effects.
This process will inevitably involve debate and discussion, and in an era of technological and social complexity, creating sound policy increasingly requires careful attention to sources of specialized expertise in the matter at hand.
Unfortunately, today’s Republicans and Democrats can’t even agree on what time it is, let alone what our actual problems are. The GOP buffoons who increasingly dominate America’s legislative chambers ignore virtually all the “grunt work” needed for sound policymaking. When they aren’t fundraising, preening for Faux News cameras or producing television ads blaming “others” for real and imagined social problems, they are using legislative tactics to block rather than produce policies.
(This is frustrating for all serious citizens, of course, but I spent the last 21 years of my career teaching policy, and watching the total abandonment of actual governance in favor of performative antics is beyond painful.)
It’s one thing to outline the steps of the policy process, as I’ve done above. But just as a (non-AI) picture can be worth a thousand words, a real-life example can be more illustrative than an abstract process outline. So let’s look at a tax bill that Trump still touts as evidence of…something.
As the Institute on Taxation and Economic Policy explains:
The tax overhaul signed into law by former President Donald Trump in 2017 cut the federal corporate income tax rate from 35 percent to 21 percent, but during the first five years it has been in effect, most profitable corporations paid considerably less than that. This is mainly due to loopholes and special breaks that the 2017 tax law left in place and, in some cases, introduced. Corporate tax avoidance occurs because Congress allows it to occur, and the Trump tax law in many ways made it worse.
Tax policy is one of many intractable dividing lines between Republicans and Democrats, and it is a given that the tax overhaul of 2017 was not a product of agreement over the nature of the problem. Republicans think the problem is that businesses have to pay too much; Democrats think the problem is that wealthy folks aren’t paying their fair share. Clearly, a tax cut for profitable businesses is not the result of agreement on the nature of the problem. But the linked report focuses on the part of the policy process that both parties–and the Keystone Kops in Congress–routinely ignore.
How is it working?
The Institute looked at taxes paid by profitable corporations.
- The 342 companies included in this study paid an average effective income tax rate of just 14.1 percent during this five-year period, almost a third less than the statutory rate of 21 percent.
- Nearly a quarter of the corporations in this study (87 companies) paid effective tax rates in the single digits or less during this five-year period.
- Of these, 55 (16 percent of the total 342 companies) paid effective rates of less than 5 percent. This is particularly striking given that all these companies were profitable for at least five years consecutively. Companies paying less than 5 percent include T-Mobile, DISH Network, Netflix, General Motors, AT&T, Bank of America, Citigroup, FedEx, Molson Coors, Nike, and many others.
- Twenty-three corporations paid zero federal tax over the five-year period despite being profitable in every single year. And 109 corporations paid zero federal tax in at least one of the five years.
- At the other end of the spectrum, 50 corporations paid effective tax rates of more than 21 percent, but most of these companies were also the beneficiaries of large tax breaks because they were paying taxes from previous years that they delayed using depreciation breaks.
One obvious “fix” for this would be passage of the global minimum tax negotiated by the Biden administration that’s currently being blocked by GOP lawmakers more interested in currying favor with special interests than engaging in the policy process.
Americans deserve better.
YES – and the dumb bunnies keep trying to defund the IRS. That would further reduce US Gov income and increase tax avoidance. https://www.budget.senate.gov/chairman/newsroom/press/proposed-cuts-to-irs-enforcement-would-add-24-billion-to-deficit-cbo-finds
The worst part of the Republican policy is that all of us that have our income reported on a 1099 have almost none of this wiggle room.
For several years I ran an Airbnb resulting in “passive income”. I was amazed at the breaks I got for reporting “business expenses“. It took a lot of paperwork but I was able to cut my “business” tax bill by about 25% for “deductions” that would have been money out of my pocket whether or not I was running the “business”.
In a way, this is how revolutions get started. By shifting the financial burdens of government to the poorest entities, resentment becomes the product of the greed. When that resentment reaches a turning point, violent revolution results.
Look at the Trump campaign … He’s already fomenting violence by promoting resentment and grievance to the weakest minds (albeit the most well-armed) among us. Solutions? Well, as Willie Sutton once said when asked why he robs banks, he voiced the obvious: “That’s where the money is.”
Republicans, of course, are without any moral compass or sense of fairness to working people; you know the folks who made the rich people rich. So, they will continue to stay on their knees before they’re gods of industry and banking to curry that favor. They have absolutely no intention of governing for the majority of citizens.
If things don’t change dramatically, look for an outright violent insurrection attempt in November after the “free and fair election” determines that Trump lost – again – to the majority of rational people. Look for the guns to come out of the closet and an armed attack on voting centers, government buildings, etc. Even though the acute grievances are manufactured by a psychopath, those attacking our foundations are too stupid to know what they’re doing beyond feeding their own self-saved misbehaviors.
Flat Corporate rate, no deductions! Same for the wealthy! Health and welfare for ALL Citizens is a constitutional right, not a suggestion!
John Sorg,
Of course. But where’s the fun in that? How would politicians operate if not for the bribes?
We don’t run government like a business. Notice that the description of the process did not include:
– Consideration of “unintended consequences”
– Heavy thought on “how can grifters take advantage of this?”
– Strong oversight for cheating
– Measurement of impacts and scheduled review of needed fixes
Our founders could and did anticipate distruction of the Republic from within from the return of tribal, territorial, politics (spread now by for profit media for more profit). They assumed that liberal democracy was necessary and sufficient to make it impossible.
It may turn out to be necessary but insufficient to resist the power of greed.
We need to return to pre-Reagan corporate tax rates and impose taxes, or payments in lieu of taxes, on non-profit organizations. Reagan was the champion of Friedman’s trickle-down economics, which was a failed policy all around.
Biden said he was getting rid of trickle-down economics but has yet to be successful. He also has corporate donors who will fight him on it and blame the Republicans for not playing along.
Today, most policies are written by corporate lawyers for lobbying firms. ALEC underwrites boilerplate policies and then distributes them to the Red States. Based on comments from both parties, the Israeli lobbyists also underwrite policies for their members.
Politicians spent a week posting about the CCP’s threats to 170 million TikTok users. The Chinese were manipulating users against the US government. The US House rushed a bill through the lower chamber. Yesterday, the Intel community admitted the CCP threat to national security was hypothetical. When pressured, the Intel community and politicians had to confess they had no evidence of the CCP using data or manipulating users with Chinese propaganda. #Amazing
Washington politicians are owned by the oligarchy and lobbyists, which is why their policies are disconnected from citizens’ realities.
I wrote a blog a few years ago comparing my tax rate with that of Boeing, a “defense contractor” who rakes in billions of our tax dollars from the Defense Department every year. I found that I paid at a higher rate than Boeing in most years and that in one year Boeing not only paid nothing but got money back from the IRS, a year in which they had a net profit of billions.
I once served as a Deputy AG for two years in charge of the tax code of the Territory of Guam, which adopted the Internal Revenue Code as its own via The Organic Act of Guam of 1950. It was a time of considerable investment in beach hotels and other businesses in Guam by investors from foreign countries, notably Japan and Taiwan. The United States (and thus Guam) has tax treaties with some foreign countries, and such treaties constitutionally supersede statutes such as the Internal Revenue Code. It was an interesting time and I was in the Ninth Circuit more than once on appeals from both foreign and domestic taxpayers.
,
I have written many times that there are two statutes which need a complete redo, i. e., the Internal Revenue Code and the Bankruptcy Act, both of which were written by corporate counsel and sold to Congress by well-paid lobbyists. I repeat that plea today. You and I are being taken to the cleaners. . .
“Then what happens?” Those who can seek out the loopholes and work-arounds, and play fast and loose with the legislation. The founders concerns about greed and deception were well founded.
Republicans claim to be the party of low taxes but obscure the “for whom” parts of their formula because their enthusiasm for always increasing the rate of wealth redistribution up has always been unsustainable and has reached or exceeded the limits that workers tolerate.
Per my earlier comment:
We don’t run government like a business. Notice that the description of the process did not include:
– Consideration of “unintended consequences”
– Heavy thought on “how can grifters take advantage of this?”
– Strong oversight for cheating
– Measurement of impacts and scheduled review of needed fixes
Why not? Lobbyists and their money are the “devil in the details”. Equal rights here for DEMs and GOPers.
Beyond a bill becoming a law is the process of regulation writing. This is done in most instances where national security is not an issue. How a law actually works is determined by that process. If you want to see how this is done, check out the Federal Register. They put proposed regulations on the web and offer an opportunity to comment.
If you want to know how so much good law ends up doing so little to solve a problem, you need to know that the big corporations have thousands of people monitoring the regulations and producing comments that direct the process to their benefit. There’s not enough comment from those who want a law to work the way it was written to offset the corporate effort to control the process. if we want to change this, we need a cadre of commenters to push back against the orchestrated corporate comments.
Peggy – SO WRITE ON!
Simplistic arguments for a flat tax without deductions, wealthy paying their fair share, corporations paying their fair share, etc., are unrealistic. Modern business is far too complicated for that. However, the ludicrous boondoggles, especially those in 2003 and 2017 have led us to a set of laws that is beyond complicated. Complicated problems do have answers. There are many current situations where there no clear unambiguous answers. There’s an intelligent man running for Congress in Indiana who actually has a grasp of these things. Listen to what your candidates say, and try to separate analysis from sloganeering. Full disclosure: I am no longer an Indiana voter.