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Why Making American Corporations More Competitive Doesn't Help Most Americans

By       Message Robert B. Reich       (Page 1 of 2 pages)     Permalink    (# of views)   4 comments

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From Robert Reich Blog

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Trump and congressional Republicans are engineering the largest corporate tax cut in history in order "to restore our competitive edge," as Trump says.

Our competitive edge? Who's us?

Most American corporations -- especially big ones that would get most of the planned corporate tax cuts -- have no particular allegiance to America. Their only allegiance is to their shareholders.

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So restoring their "competitive edge" has little or nothing to do with helping American workers.

For years they've been cutting the jobs and wages of American workers in order to generate larger profits and higher share prices.

Some of these jobs have gone abroad or been outsourced to lower-paid contractors in America. Others have been automated. Most of the remaining jobs pay no more than they did four decades ago, adjusted for inflation.

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When GM went public again in 2010 after being bailed out by American taxpayers, it boasted of making 43 percent of its cars in places where labor is less than $15 an hour -- often outside the United States. And it got its American unions to agree that new hires would be paid half the wages and benefits of its old workers.

Capital is global. Big American corporations are "American" only because they're headquartered and legally incorporated in the United States. But they could (and sometimes do) leave at a moment's notice. They employ or contract with workers all over the world.

And they're owned by shareholders all over the world.

According to research by the Tax Policy Center's Steven Rosenthal, about 35 percent of stock in U.S. corporations is now held by foreign investors.

So when taxes of "American" corporations are cut -- as the Trump-Republican tax bill seeks to do -- foreign investors get a windfall.

The Institute on Taxation and Economic Policy estimates that the Senate majority's tax bill would give foreign investors a tax cut of $31 billion in 2019. The House bill would give them $50.4 billion.

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That's money that foreign investors would otherwise be paying into the U.S. Treasury.

By way of comparison, the combined tax cuts for families in the bottom 80 percent of the income distribution in the 30 states won by President Donald Trump comes to just $39.4 billion. That's far less than the House bill gives away to foreign investors.

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Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

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