It Isn’t Just Tax Rates

A new study has found that at least 55 of America’s largest companies paid zero taxes last year, despite making billions of dollars in profits. It’s infuriating.

As the New York Times reports, that 2017 tax bill eagerly passed by Republicans in Congress and signed with great fanfare by the former guy, reduced the corporate tax rate to 21 percent from 35 percent. On top of that gift,

dozens of Fortune 500 companies were able to further shrink their tax bill — sometimes to zero — thanks to a range of legal deductions and exemptions that have become staples of the tax code, according to the analysis…

Twenty-six of the companies listed, including FedEx, Duke Energy and Nike, were able to avoid paying any federal income tax for the last three years even though they reported a combined income of $77 billion. Many also received millions of dollars in tax rebates.

As Bernie Sanders has reportedly noted, if you paid 135 for a pair of Nike shoes, you paid more for them than Nike paid in taxes.

The Times article has a list of the most profitable companies that paid no taxes last year.

Publicly traded corporations have to file financial reports, and those reports include the amounts they’ve paid in federal income taxes. When challenged about their ability to avoid paying taxes, most respond that they “fully comply” with the laws. Which is undoubtedly true. (Okay, maybe not for those with accounts in offshore tax havens…Although that tactic is more common among filthy rich individuals than corporations…)

It’s relatively simply to “fully comply” with tax provisions (aka “loopholes”) that are  intended to encourage socially useful behaviors like investing in clean energy or modernizing aging equipment.

The $2.2 trillion CARES Act, passed last year to help businesses and families survive the economic devastation wrought by the pandemic, included a provision that temporarily allowed businesses to use losses in 2020 to offset profits earned in previous years, according to the institute.

Several of these deductions and credits are justifiable. Others, much less so.

I agree with Elizabeth Warren, who has been quoted as saying that giant corporations with billions of dollars of profit shouldn’t be able to pay $0 in federal taxes. According to the Times, today’s tax avoidance strategies include a mix of old standards and what the report calls “new innovations”. It’s hard to argue, for example, for the social benefit of allowing companies to save billions of dollars by characterizing the purchase of discounted stock options by their top executives as a loss, which they then deduct.

The Biden administration announced this week that it planned to increase the corporate tax rate to 28 percent, and establish a kind of minimum tax that would limit the number of zero-payers. The White House estimated that the revisions would raise $2 trillion over 15 years, which will be used to fund the president’s ambitious infrastructure plan.

Supporters say that in addition to yielding revenue, the rewrite would help make the tax code more equitable, requiring individuals and companies at the top of the income ladder to pay more. But Republicans have signaled that the tax increases in the Biden proposal — which Senator Mitch McConnell of Kentucky, the minority leader, called “massive” — will preclude bipartisan support.

Individual taxpayers have long had to contend with the Alternative Minimum Tax. That provision was created in the 1960s, with the goal of preventing high-income taxpayers from using various deductions and credits to avoid the individual income tax. There’s no reason why a similar mechanism shouldn’t apply to corporate giants using provisions of the tax code to avoid paying any taxes on massive profits.

Meanwhile, It would be illuminating if a Congressional committee were to examine the credits and deductions allowed by the current tax code, and eliminate those that no longer make much sense. (Some never did.)

If nothing else, it would be interesting to see how the Republican supporters of these provisions would defend them.

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I And We

The other day, someone posted the following to my neighborhood listserv:

“An anthropologist showed a game to the children of an African tribe… He placed a basket of delicious fruits near a tree trunk and told them: The first child to reach the tree will get the basket. When he gave them the start signal, he was surprised that they were walking together, holding hands until they reached the tree and shared the fruit! When he asked them why you did that when every one of you could get the basket only for him! They answered with astonishment: Ubuntu. ‘That is, how can one of us be happy while the rest are miserable?’ Ubuntu in their civilization means: (I am because we are). That tribe knows the secret of happiness that has been lost in all societies that transcend them and which consider themselves civilized societies.”

“I am because we are.” When you think about it, that’s pretty profound. In western cultures, it might be considered a way of understanding long-term self-interest.

The post especially resonated with me because I get so annoyed by all the evidence of very short-term self-interest displayed by people who clearly don’t understand how much they depend upon what I like to call “social infrastructure.”

I still recall a discussion with one of those “self-made”businessmen in which he insisted that anyone willing to work hard could succeed, that what I identified as barriers were really just excuses for sloth. I responded that, if that were the case, there evidently were no “hard workers” in the slums of India or Bangladesh. Surely, the rather obvious lack of social and physical infrastructure wasn’t their problem…

I don’t know what keeps so many people from understanding the various ways that social systems operate to enable or deter individual prospects. That “self-made” man was tall, White, college educated, with parents who had also been college educated (and at a very selective college). I assume his social circle simply didn’t include people without the means to access higher education, or people from “bad” neighborhoods or marginalized groups, and he obviously lacked the imagination and/or empathy needed to understand the realities of people unlike himself.

Are there lazy people in every society? Sure. Are there people who lack the skills and/or ambition to succeed (however one defines success)? Of course. In a functional society, the object should be to provide a floor, a starting-line beyond which individuals can go as fast and far as their talents take them. Equality of opportunity–not equality of result– is the goal, but equality of opportunity requires a reasonably level starting-place and an absence of invidious discrimination.

Think of life as a footrace.

If I’m running a race and several of the people competing with me are required to carry ten-pound sandbags on the run, I have an unfair advantage over them. If none of us are made to tote those sandbags, but contestants of color, or those with different sexual orientations or religions are only allowed to start the race five minutes after the rest of us, most of them will be unable to make up the difference.

Removing those impediments is no guarantee that everyone running will get to the finish line at the same time–or at all. But they’ll participate in a race and society that gives its citizens an equal opportunity to go as far as their individual gifts and hard work will take them.

And that takes us back to the insight captured by the post to the listserv: individuals do better, and are demonstrably happier, in a supportive society that looks out for everyone. In the long term, a fair and humane society is in our individual self-interest.

Ultimately, ubuntu is wisdom. Good people really cannot be happy in a society where substantial numbers of other people are miserable.

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An Inside Assessment

Those of us who are Democrats, ex-Republicans and/or Never Trumpers often encounter allegations of bias. The charge is that our criticisms are unfair to the GOP members of Congress–that we are exaggerating their flaws for political reasons.

John Boehner’s new book rebuts that accusation.

No one can accuse Boehner of being a “lib.” He was–for those who may have forgotten–the Speaker of the House when the Republicans controlled that legislative body, and his scathing description of its members rings true.

In the 2010 midterm election, voters from all over the place gave President Obama what he himself called “a shellacking.” And oh boy, was it ever. You could be a total moron and get elected just by having an R next to your name—and that year, by the way, we did pick up a fair number in that category.

Retaking control of the House of Representatives put me in line to be the next Speaker of the House over the largest freshman Republican class in history: 87 newly elected members of the GOP. Since I was presiding over a large group of people who’d never sat in Congress, I felt I owed them a little tutorial on governing. I had to explain how to actually get things done. A lot of that went straight through the ears of most of them, especially the ones who didn’t have brains that got in the way. Incrementalism? Compromise? That wasn’t their thing. A lot of them wanted to blow up Washington. That’s why they thought they were elected.

 Boehner quotes Ronald Reagan for the sentiment that getting 80 or 90 percent of what he wanted was a win, while the “new guys” wanted 100 percent every time. “In fact, I don’t think that would satisfy them, because they didn’t really want legislative victories. They wanted wedge issues and conspiracies and crusades.” When Boehner tried to get legislation passed, they considered him a sellout, a dupe of the Democrats, a traitor–a “liberal collaborator.”

Boehner pulls no punches when it comes to the hatred House Republicans felt for Obama.

What I also had not anticipated was the extent to which this new crowd hated—and I mean hated—Barack Obama.

By 2011, the right-wing propaganda nuts had managed to turn Obama into a toxic brand for conservatives. When I was first elected to Congress, we didn’t have any propaganda organization for conservatives, except maybe a magazine or two like National Review. The only people who used the internet were some geeks in Palo Alto. There was no Drudge Report. No Breitbart. No kooks on YouTube spreading dangerous nonsense like they did every day about Obama.

He’s a secret Muslim!”

“He hates America!”

“He’s a communist!”

And of course the truly nutty business about his birth certificate. People really had been brainwashed into believing Barack Obama was some Manchurian candidate planning to betray America.

Most of us saw that hatred, and understood the racism that motivated it. What was truly eye-opening, however, was Boehner’s description of Roger Ailes’ metamorphosis from a politically conservative media person to something else entirely.

At some point after the 2008 election, something changed with my friend Roger Ailes. I once met him in New York during the Obama years to plead with him to put a leash on some of the crazies he was putting on the air. It was making my job trying to accomplish anything conservative that much harder. I didn’t expect this meeting to change anything, but I still thought it was bullshit, and I wanted Roger to know it.

When I put it to him like that, he didn’t have much to say. But he did go on and on about the terrorist attack on the U.S. Embassy in Benghazi, which he thought was part of a grand conspiracy that led back to Hillary Clinton. Then he outlined elaborate plots by which George Soros and the Clintons and Obama (and whoever else came to mind) were trying to destroy him.

“They’re monitoring me,” he assured me about the Obama White House. He told me he had a “safe room” built so he couldn’t be spied on. His mansion was being protected by combat-ready security personnel, he said. There was a lot of conspiratorial talk. It was like he’d been reading whacked-out spy novels all weekend.

And it was clear that he believed all of this crazy stuff. I walked out of that meeting in a daze. I just didn’t believe the entire federal government was so terrified of Roger Ailes that they’d break about a dozen laws to bring him down. I thought I could get him to control the crazies, and instead I found myself talking to the president of the club. One of us was crazy. Maybe it was me.

The excerpt at the link also has juicy stories about Michele Bachmann and Ted Cruz, among others.

This excerpt from Boehner’s book demonstrates two things: (1) there were once sane Republicans who cared about governing (and knew how to spell it), and (2)the degree to which they have been replaced by members of the lunatic caucus.

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Can We Talk?

If there is one thing about which Americans of all political persuasions agree, it is that the electorate is dramatically polarized. Our differences are so profound that a one recent poll found parents more accepting of  a child’s inter-racial or inter-religious marriage than a marriage to a member of the opposing political party.

A commenter recently made me aware of an effort to bridge our political abyss. The organization is called “Braver Angels,” and its website explains its purpose:

The days after the election could begin a dark time of polarization in the land—unless we act together to make it otherwise.  That’s where the With Malice Toward None initiative comes in. The goal is to create a space for people to deal with their emotions (positive and negative), to build our capacities for working together to address our common challenges, and to commit ourselves to a renewed citizenship.  

The organization has mounted what appears to be a sincere and well-meaning effort at understanding and rapprochement. I have not been privy to any of the discussion sessions, and if they have managed to moderate some of the animus that definitely exists between right and left wing voters, more power to them, but I don’t hold out much hope for a kumbaya outcome, for reasons I have previously explained.

The problem is the nature, rather than the extent, of America’s current divisions. 

Discussions of policy differences can be very productive–not only generating increased understanding of where the “other guy” is coming from, but enabling reasonable compromises. I am a big proponent of mass transit, but I have engaged in informative discussions with people who are leery of its appeal to sufficient numbers of riders. I am firmly opposed to gerrymandering, but I understand those who argue that the problem is really the country’s “big sort” into urban Democratic areas and rural Republican precincts. I’m pro-choice, and I’ve had civil conversations with at least some people adamantly opposed to abortion. 

When our political discussions address these and numerous other policy differences, I absolutely agree that they should be encouraged, and that deepened understandings of  others’ positions can result.

The problem today–at least as I see it–is that Americans are not arguing about policy. We aren’t quibbling about what the evidence says about job losses when the minimum wage is raised, or about the specifics of needed immigration reforms. Instead, our truly profound differences are about values.

It is simply not possible–at least for me–to “understand and appreciate” the worldview of someone who is just fine with caging brown children. I cannot overlook the hypocrisy of “family values” voters who are ardent Trump supporters despite his sexual and marital behaviors, or of the “good Christians” who enthusiastically endorse White Nationalism and Trump’s belief that there are “good people” among self-identified Nazis. I cannot imagine  an amicable conversation with QAnon folks who believe that Democrats are sexually abusing and then eating small children. 

Interestingly, in 2012, The Atlantic reported on a team of academic researchers who have collaborated at a website — “www.YourMorals.org” — designed to ferret out value differences, rather than focusing on policy disputes.

Their findings show how profound the chasm is on values questions between liberals and conservatives. Generally speaking, not only do liberals place high importance on peace, mutual understanding, and empathy for those who have difficulty prevailing in competition, they demonstrate concern for equality of outcome, while conservatives place pointedly low or negative importance on such values.  On the other side, conservatives believe that the use of force is a legitimate method of conflict resolution across a range of domains, from war to law enforcement to the discipline of children. Conservatives are more likely to believe in an “eye for an eye,” are more likely to respect received tradition, and are overwhelmingly committed to the proposition that individuals are responsible for their own economic condition — all views rejected by liberals. 

The article was titled “Conservatives are from Mars, Liberals are from Venus.”

Liberals who want to reach out and pursue understanding with today’s Republicans undoubtedly believe that not everyone in the GOP endorses the Trump administration’s racism, lack of integrity and contempt for the common good. What they fail to recognize is the significant exodus of reasonable, genuinely conservative voters from the GOP over the past four years. It isn’t simply the “Never Trumpers”–although they symbolize that exodus.

As my youngest son says, the people who are left in today’s Republican Party either share Trump’s racism, or don’t consider it disqualifying. I think the likelihood of finding common ground with such people–the likelihood of singing kumbaya with them–is vanishingly small.

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An Intriguing Analysis

Paul Krugman recently had a column that–almost incidentally–amplified the findings I reported on yesterday from Democracy Corp’s focus groups.

He began by noting that Biden simply doesn’t arouse the same degree of animosity that Obama did. Krugman leaves it there, but the reason for the moderation of vituperation is pretty obvious: Biden’s a White guy. Yes, he’s a hated Democrat/Socialist/Leftie/Whatever, but at least he’s not Black.

Krugman focused on the lower level of animus and hostility aimed at Biden by Republicans, and speculated over what that “low energy” opposition might mean for the prospects of upcoming legislative proposals.

Just about every analyst I follow asserted, almost until the last moment, that $1.9 trillion was an opening bid for the rescue plan and that the eventual bill would be substantially smaller. Instead, Democrats — who, by standard media convention, are always supposed to be in “disarray” — held together and did virtually everything they had promised. How did that happen?

Much of the post-stimulus commentary emphasizes the lessons Democrats learned from the Obama years, when softening policies in an attempt to win bipartisan support achieved nothing but a weaker-than-needed economic recovery. But my sense is that this is only part of the story. There has also been a change on the other side of the aisle: namely, Republicans have lost their knack for demonizing progressive policies.

Krugman is careful to note that the decrease in demonization applies to policies (after all, lots of Republicans still believe that Democrats managed to steal a federal election at the same time they were sexually exploiting and then feasting on small children…) But as he notes, there’s been an absence of “bloodcurdling warnings about runaway inflation and currency debasement, not to mention death panels.”

True, every once in a while some G.O.P. legislator mumbles one of the usual catchphrases — “job-killing left-wing policies,” “budget-busting,” “socialism.” But there has been no concerted effort to get the message out. In fact, the partisan policy critique has been so muted that almost a third of the Republican rank and file believe that the party supports the plan, even though it didn’t receive a single Republican vote in Congress.

Krugman notes a number of possible explanations: the obvious hypocrisy of screaming about deficits under Obama and then incurring huge ones via tax cuts for the rich; the fact that none of their past, dire warnings of inflation under Obama–or their rosy predictions of a boom under Trump–materialized (although, as he points out ” inconvenient facts haven’t bothered them much in the past.”)

Or perhaps Republicans no longer know how to govern. They are trapped in a culture war of their own creation. As Krugman notes, while the Democrats were fashioning legislation and hammering out policy compromises, Republicans were screaming about Dr. Seuss and Mr. Potato Head.

In short, the prospects for a big spend-and-tax bill are quite good, because Democrats know what they want to achieve and are willing to put in the work to make it happen — while Republicans don’t and aren’t.

I have been extremely happy with what the Biden Administration has done–and failed to do–thus far. This is a highly competent operation. What is undoubtedly true, however, is that one reason the path has been smoother for Joe Biden is simply because his skin is white.

And that is an incredibly sad commentary on the current state of America.

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