Corporate class colludes to try to keep Trump-GOP tax cut
When he was GOP Senate Majority Leader under Trump, Mitch McConnell shepherded through the Senate an outrageous and unaffordable nearly 2 trillion dollar tax cut for the rich that they desperately want to hold onto now. Andrew Harnik | AP

WASHINGTON—With Congress returning to town after its Labor Day-Rosh Hashanah break, the nation’s corporate class is colluding to kill a big-ticket item on the lawmakers’ agenda: The legislation helping people that received a roadmap when lawmakers approved the $3.5 trillion budget “reconciliation” resolution in August.

Their reasons have little to do with the programs reconciliation paves the way for, including an expanded earned income tax credit, the elements of the Green New Deal, expanded and improved child care—and better pay for caregivers—permanent paid family and medical leave, or even the Protect the Right to Organize (PRO) Act.

Instead, their objective is to keep the financial bonanza the GOP Trump regime and a GOP-run Congress bestowed on them: The $1.7 trillion-plus personal and corporate tax cut.

Progressives and unions are fighting back, particularly defending the virtual repeal of that 2017 Trump-GOP tax disaster.

“We must not waste this historic opportunity to crack down on offshore corporate tax avoidance and align our tax rules with the interests of working people rather than the ultra-wealthy and multinational corporations,” the AFL-CIO and 13 unions wrote top lawmakers.

Out in the open and behind closed doors

One corporate campaign vehicle which is both out in the open, in tweets and statements as well as behind closed doors in lobbying and campaign contributions, is the “America’s Job Creators For A Strong Recovery,” a coalition of 28 industry groups.

Led by the National Association of Wholesaler-Distributors, the “job creators,” formed in May, includes the notoriously anti-worker anti-union Associated Builders and Contractors. Separately, the Chamber of Commerce and the National Federation of Independent Business are also trying to kill legislation, notably tax hikes which reconciliation allows.

But the PRO Act, the most comprehensive pro-worker labor law legislation since the original National Labor Relations Act, especially upsets NFIB, a key cog in the radical right.

“The PRO Act would dramatically suspend long-standing employment laws in favor of labor unions—at the expense of #smallbusinesses and employees,” NFIB’s tweet claims.

NFIB’s analysis particularly pans the PRO Act’s sharp restrictions on the employers’ “independent contractor” dodge. That misclassification robs workers of the right to organize, and rights to jobless benefits and workers comp. It also loads the employer’s share of payroll taxes for Social Security and Medicare on workers’ backs, joining their own shares.

“@chadheinrich says PRO Act would bring California-style independent contracting rules to rest of country,” says a follow-up tweet from NFIB’s Arizona affiliate. “Less flexibility, reduced choice, increased litigation if PRO Act passes, bad news for small business. Counting on @SenatorSinema and @SenMarkKelly.”

That tweet also gives a clue to another part of the corporate strategy: Target “moderate” lawmakers who are leery of the social programs reconciliation would pave the way for Sens. Krysten Sinema and Mark Kelly, both D-Ariz., and Joe Manchin, D-W. Va., and the nine House Democrats who threatened to vote against reconciliation.

They said they would kill it—and had enough votes to do so since House Dems have only a 220-212 majority—unless the “compromise” Biden-GOP $978 billion infrastructure plan came up first. House Speaker Nancy Pelosi, D-Calif., deftly sidetracked their threat. Infrastructure will come up in September. Reconciliation already passed.

Another corporate coalition is Reforming America’s Taxes Equitably (Rate), a group of 35 of the nation’s largest companies, formed a decade ago. They include AT&T, Boeing, General Dynamics, Home Depot, FedEx and UPS, the CVS pharmacy chain, the Edison Electric Institute—the lobby for “investor-owned” utilities—Ford, Nike, Verizon, and Walmart.

Rate also includes the National Retail Federation, a leading foe of raising the federal minimum wage. Co-chaired by veteran Democratic operative Elaine Kamarck, Rate crusades for lower corporate tax rates. Biden and reconciliation bill crafter Sen. Bernie Sanders, Ind-Vt., want to raise the corporate tax rate to 28%, part of their rollback of the Trump-GOP tax cut.

“We believe a lower corporate tax rate would better allow U.S. businesses to compete in today’s globalized marketplace. We believe the best means of achieving a more competitive tax system is through a direct reduction in the overall corporate tax rate,” Rate’s mission statement says.

Lobbying spending is another matter. There’s Big Pharma, led by the Pharmaceutical Research and Manufacturers Association (PHARMA)—and there’s everyone else. PHARMA alone has already spent $15.22 million just in the first half of this year, OpenSecrets.org reported. That’s in addition to lobbying spending by individual drug companies. Pfizer led them ($6.67 million). Drug industry lobbying is on anti-reconciliation, among other goals.

Pharmaceutical lobbying through the roof

Pharmaceutical lobbying spending through June 30 totaled $171.6 million. That’s one of every nine dollars all businesses nationwide spent on lobbying in the first half of 2021. By contrast, unions spent $22 million, combined, in the same six months, OpenSecrets noted.

There’s another reason Big Pharma wants to kill anything out of reconciliation. Not only would that $3.5 trillion plan raise domestic corporate tax rates, but it would institute a 15% federal tax on overseas profits. Big Pharma has a lot of overseas plants. And, most importantly for the drug makers, it would let Medicare bargain down drug prices, just as the Veterans Affairs Department, Medicaid, and the Defense Department can bargain them down now.

With those four agencies accounting for about half of all U.S. health care spending, including spending on drugs, letting the largest of them, Medicare, drive down prices would drive down drug company revenues and profits, too.

“At least 60 new treatments and cures will be sacrificed if this” drug price bargaining “proposal becomes reality and is further proof that patients with devastating disease could be denied access to medicines today and in the future,” PHARMA CEO Steven Ubl said on its website. “Members of Congress shouldn’t buy the false choice that we have to have fewer life-saving treatments to lower drug costs.”

Progressive groups and lawmakers are raising alarm about the corporate push to keep their riches, by avoiding taxes, including the proposed hike on overseas profits. “This is what oligarchy and a corrupt political system are all about. The rich and large corporations get richer, and their lobbyists do everything possible to protect their wealth and greed. Not this time,” Sanders tweeted.

“Our members live and work in every congressional district in the country, and they expect their representatives in Congress to take action now to fix the broken system that puts their jobs at risk,” the AFL-CIO and 11 unions wrote to Rep. Richard Neal, D-Mass., chair of the tax-writing House Ways and Means Committee, just before Labor Day.

“Right now, offshore profits of American corporations are taxed at roughly half the rate applied to U.S. profits under the rules enacted as part of the Tax Cuts and Jobs Act (TCJA) of 2017,” the unions said. “Other provisions in the TCJA punish firms for their investments here.

“U.S. multinationals currently pay an effective tax rate of 7.8%, according to the Joint Committee on Taxation, far lower than the 18.1% effective rate levied by our top ten global trading partners. Non-partisan analysis by Reuters confirms that even if all of the proposed Build Back Better corporate tax reforms are enacted, U.S. firms will still pay an effective tax rate that is several points lower than their foreign rivals,” the unions added (their emphasis).

They also noted Biden’s Treasury Department proposed two federal rules to stop other corporate tax dodges. One would crackdown on firms that sell themselves to foreign firms to avoid U.S. taxes, by limiting those combined firms’ access to the U.S. market. The other would ban “inversions,” where the U.S. multi-national reincorporates in an overseas tax haven and channels profits there. Some $97 billion in profits were reported from Bermuda alone last year.

“This kind of offshore corporate tax dodging…benefits corporate shareholders who are mostly wealthy Americans and foreign investors. A recent study found 40% of the shares in American corporations are owned by foreign investors. Corporate tax dodging is a bad deal for working people—and our members know it,” the unions’ letter to Neal said.

Besides the AFL-CIO, other unions on the letter were the Communications Workers, the Auto Workers, the Teamsters, AFSCME, the Teachers (AFT), the Bakery Confectionery and Tobacco Workers & Grain Millers, the Machinists, the Professional and Technical Engineers, the National Education Association, the Service Employees, Unite Here, the Steelworkers and the Utility Workers.


CONTRIBUTOR

Mark Gruenberg
Mark Gruenberg

Mark Gruenberg is head of the Washington, D.C., bureau of People's World. He is also the editor of Press Associates Inc. (PAI), a union news service in Washington, D.C. that he has headed since 1999. Previously, he worked as Washington correspondent for the Ottaway News Service, as Port Jervis bureau chief for the Middletown, NY Times Herald Record, and as a researcher and writer for Congressional Quarterly. Mark obtained his BA in public policy from the University of Chicago and worked as the University of Chicago correspondent for the Chicago Daily News.

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