By Dave Johnson
Fellow, Campaign for America's Future
First it was Fix the Debt, with tax-dodging corporations “leading the charge for massive new corporate tax cuts paid for with cuts to Social Security, Medicare, and Medicaid.” Now there’s a new “LIFT America coalition,” pushing for massive, massive corporate tax cuts, without bothering about cutting benefits. LIFT stands for “Let’s Invest for Tomorrow,” but as Citizens For Tax Justice (CTJ) points out, it really ought to be called LIE, for “Let’s Invest Elsewhere.”
The executives who run the giant multinationals want to be let off the hook for paying taxes on profits they make outside our borders. As an Apple executive said to The New York Times, giant multinationals “don’t have an obligation to solve America’s problems.” And to prove it, American corporations are holding $1.7 trillion in profits outside the country – just sitting there – rather than bringing that money home, paying the taxes due and then paying it out to shareholders or using it to “create jobs” with new factories, research facilities and equipment.
The LIFT Coalition
This corporate lobbying coalition claims that “antiquated U.S. tax laws are threatening America’s economic competitiveness.” They want their taxes lowered with a “Territorial Tax System” so they “pay home country tax rates that are competitive with those paid by foreign business rivals” (i.e. little or no taxes on their profits).
The LIFT website is full of lobbyist-speak, like “reform,” “modernize,” and “attract more investment.” When you hear lobbyists talk about “reforming” and “modernizing” things, it means that by the time they get done you’re going to have less money and the giant corporations they pay them are going to have more.
The short version of what LIFT wants: Lower corporate taxes here, plus no taxes on profits they make outside the country. These are the “antiquated U.S. tax laws … threatening America’s economic competitiveness” they are talking about. And they very well might have the money to push this through the Congress.
What this means is if we want to have schools and universities, roads and bridges, courts, police, military and the other things that support their companies, don’t expect them to cough up money for them. They are opting out of the social contract that asks them to help fund those things that helped them prosper. It’s all on us.
Who is in this LIFT coalition? From their website:
Members of the LIFT America Coalition include – 3M, Caterpillar Inc., Cisco, Eli Lilly and Company, Emerson, Financial Executives International, Honeywell International, Inc., Hewlett-Packard Company, International Business Machines Corporation, Information Technology Industry Council, Intel, Johnson & Johnson, National Foreign Trade Council, Oracle, Pfizer, Procter & Gamble, Semiconductor Industry Association, The Coca-Cola Company, United Technologies Corporation., Xerox Corporation, and Yum! Brands.
LIFT also relies on videos and materials from the Tax Foundation and the Manhattan Institute. Representatives of the Koch Foundation and LIFT member Eli Lilly are on the board of directors for the Tax Foundation. The Koch Foundation and other “conservative movement” funders fund the Manhattan Institute.
Their argument is a new form of the old “cutting taxes will increase growth” argument. Except, of course, there is no evidence and certainly no historical demonstration that cutting taxes increases growth while there is plenty of evidence and historical experience that cutting taxes cuts growth.
Corporate Profits Record High – Corporate Taxes Low
Here is the economic background as LIFT comes onto the stage. Corporate profits are at record levels, while corporate taxes are very, very low – an “effective” rate of just 12.1 percent but down to zero in so many cases. Corporate tax revenue accounted for 30.5 percent of federal revenue in 1953, but by 2011 the share of corporate tax revenue had fallen to 7.9 percent. But for We, the People jobs are scarce and wages are stagnant and falling.
Corporations are holding $1.7 trillion outside of the country because they would have to pay the taxes due on those profits if the cash was brought home, which would mean helping support the schools and police and courts and military and universities and research and all the other things that enable them to prosper.
But the giant, multinational corporations are claiming they can’t compete if they have to pay taxes. So the inside-the-Beltway consensus (the same crowd that told us we should invade Iraq and now says we have to cut Social Security and Medicare) is that we need corporate “tax reform” that lowers rates, and is pushing a territorial tax system that lets corporations bring back profits made outside the country without taxation. (more…)