Tim Ryan is making himself look kind of clueless with comments like these:
Democratic Rep. Tim Ryan (Ohio) is going against party leaders and calling for a business friendly agenda ahead of the 2018-midterm elections.
“To be competitive globally, we have to reduce the corporate tax rate,” Ryan told The Hill in an interview from his Youngstown, Ohio, district office. “We’re just not competitive globally because of that.”
Ryan, a fast-rising Democrat from industrial Ohio, is challenging Democrats to take a different approach to big business and work with corporate America to create jobs.
“We can’t just be the party of redistribution of wealth; we need to be the party of the creation of wealth in communities all over the country, not to just Silicon Valley, not just Wall Street, but all over.”
…Though Ryan says he’s confident Democrats can take back the House in 2018, he insists a pro-business message will be key.
“If we could figure out the big economic question, which really is how do we get wealth out of the coasts and into the industrial Midwest and start creating real jobs by the hundreds, if not by the thousands, in places like I represent that’s a game changer for me.”
I’m tempted to send his staff a copy of our November/December 2015 issue of the Washington Monthly so they can read my brother’s excellent piece Bloom and Bust that magnificently explains how changes in public policy, not a deceptively high corporate tax rate, have caused the regional inequality that is killing places like Youngstown, Ohio.
Here’s a little sample from Phil’s article:
A major factor that has not received sufficient attention is the role of public policy. Throughout most of the country’s history, American government at all levels has pursued policies designed to preserve local control of businesses and to check the tendency of a few dominant cities to monopolize power over the rest of the country. These efforts moved to the federal level beginning in the late nineteenth century and reached a climax of enforcement in the 1960s and ’70s. Yet starting shortly thereafter, each of these policy levers were flipped, one after the other, in the opposite direction, usually in the guise of “deregulation.” Understanding this history, largely forgotten in our own time, is essential to turning the problem of inequality around.
What were some of the changes in public policy that contributed to this problem?
Well, airline regulation was one key factor:
Beginning in the late 1970s, however, nearly all the policy levers that had been used to push for greater regional income equality suddenly reversed direction. The first major changes came during Jimmy Carter’s administration. Fearful of inflation, and under the spell of policy entrepreneurs such as Alfred Kahn, Carter signed the Airline Deregulation Act in 1978. This abolished the Civil Aeronautics Board, which had worked to offer rough regional parity in airfares and levels of service since 1938.
With that department gone, transcontinental service between major coastal cities became cheaper, at least initially, but service to smaller and even midsize cities in flyover America became far more expensive and infrequent. Today, average per-mile airfares for flights in and out of Memphis or Cincinnati are nearly double those for San Francisco, Los Angeles, and New York. At the same time, the number of flights to most midsize cities continues to decline; in scores of cities service has vanished altogether.
Since the quality and price of a city’s airline service is now an essential precondition for its success in retaining or attracting corporate headquarters, or, more generally, for just holding its own in the global economy, airline deregulation has become a major source of decreasing regional equality. As the airline industry consolidates under the control of just four main carriers, rate discrimination and declining service have become even more severe in all but a few favored cities that still enjoy real competition among carriers. The wholesale abandonment of publicly managed competition in the airline sector now means that corporate boards and financiers decide unilaterally, based on their own narrow business interests, what regions will have the airline service they need to compete in the global economy. (See “Terminal Sickness,” Washington Monthly, March/April 2012.)
Railroad and trucking deregulation are another:
In 1980, President Carter signed legislation that similarly stripped the government of its ability to manage competition in the railroad and trucking industries. As a result, midwestern grain farmers, Texas and Gulf Coast petrochemical producers, New England paper mills, and the country’s mines and steel, automobile, and other heavy-industry manufacturers, all now typically find their economic competitiveness in the hands of a single carrier that faces no local competition and no regulatory restraints on what it charges its captive shippers. Electricity prices similarly vary widely from region to region, depending on whether local utilities are held captive by a local railroad monopoly, as is now typically the case.
Since 1980, mergers have reduced the number of major railroads from twenty-six to seven, with just four of these mega systems controlling 90 percent of the country’s rail infrastructure. Meanwhile, many cities and towns have lost access to rail transportation altogether as railroads have abandoned secondary lines and consolidated rail service in order to maximize profits.
It was actually aggressive public policy that created the broad regional equality the country enjoyed before deregulation and lax antitrust enforcement took it all away. Tim Ryan doesn’t know who screwed him or how he was screwed, and his solution now is to just tax the bandits less– as if the rest of us won’t have to make up the difference.
Ryan’s yet another foolish Dem using right wing framing.
Every Dem should read the following:
https://ourfuture.org/20170831/trumps-tax-plan-is-a-confidence-scam
The key point in regards to corporate tax cutting:
Per CBO taxes paid forecast 2017:
$ T. Pct GDP
Income tax 1.5. 8.2
Payroll. 1.1. 6.1
Corporate. .3. 1.6
Other. .3. 1.7
Total. 3.3. 17.8
Seems corporations don’t pay near as much taxes, as others.
Ha! You folks with your fake-maths and fake-logic – you make me laugh. They don’t care. Don’t you get it by now? They just couldn’t give two rats…
Antifa has their attention – you elites? Not so much.
Tim Ryan, along with Debbie Dingell and Sherrod Brown, are the last anchors of the D party to, like, actual working people.
Ryan is right. Our corporate tax rate is too high.
I think 20-23% would be a good rate, with no or few loopholes.
You are abandoning a rational thinking process, Booman, and simply going with the blather spewed by the Dem Party neocons. A thoughtful consideration would be helpful occasionally.
Taking away all of the loopholes before resetting the rate makes a lot of sense. Then we will see how much of the economy benefits from work having to do with dodging taxes.
A more steeply graduated set of corporate tax brackets could provide equity for small business and also have large businesses pay more of the infrastructure costs that they incur on society.
Ending the corporate inversions makes more sense than deportation but it hits a different class.
Our tax rate already is similar to other countries, just not to the tax haven where it is zero.
Poor-mouthing business interests seek to externalize all of their cost, leaving 100% profit. Most are not happy that their competition is numerous enough and good enough that they have to settle for 1%-10% in good years. That fact in itself advantages scale. A more progressive rate structure counterbalances that bias towards scale.
No, removing the loopholes without fixing the rates would fix nothing, and is never going to happen. So why suggest it? It’s a ridiculous idea.
Our stated tax rate is much higher than other countries. Our effective AVERAGE tax rate is lower. My many points explain why that is unfair. We need a tax system that is fair to large and small businesses.
Why suggest it? It is the first step to reducing the deficit. Having the possible revenues that could come in actually come in.
We need a tax rate that is fair to human taxpayers, not businesses seeking to shelter their individual income under business rates.
Arguing the line that enriches tax lawyers and tax accountants is not tax reform and will not paid government debts. Those interests are about the sole reason that political analysis argues that it won’t happen. People who make their livings off of those loopholes are a pretty widespread bunch who love their own part of the complexity. Take them all down together. It’s not government that is most people’s reason for wanting small government, it the other’s guys’ government-created benefits that are done through elaborate legislative schemes and not direct aid like transfer payments.
Tax accountant here… though I’m not going to claim that makes me an expert on anything. I mostly deal with high net worth inpatriate and expatriate tax. Still, I know enough to say that most people are largely ignorant on what effective tax reform would actually look like.
I’d say we need to be careful about generalizing our claims about businesses. The majority of businesses are not your average corporation. They are usually pass-thru entities and the resulting business income is reported on the 1040.
Most tax accountants are not particularly enriched and our jobs are increasingly likely to be automated or outsourced. You’re scapegoating a ton of people who don’t actually set policy.
The lobbyists who act on behalf of tax accountants and tax lawyers and speak as the voice of business do set policy.
I’m not scapegoating. In a good tax code there is little reason for tax accountants beyond regular accountants and no reason at all for tax lawyers. They might not set policy but they financially benefit from any added complexity to tax policy whether they want to or not. And the lobbyists claiming to represent their interests certainly do weigh in on policy.
I’ve had to find different careers struggling through unemployment enough in my lifetime not to have a whole lot of sympathy either with business owners who say, “I’ve got to make a profit” [no job gaurantees; no profit guarantees] or people claiming that their job should be guaranteed against automation or outsourcing.
That is not the same as being heartless about a society that has some reasonable infrastructure for connecting household economies with the market economy in a way that prospers both.
Your skill is tax accounting, not your identity. You are much more valuable because of a whole lot of skills that you have not developed but will because life is disruptive.
No one claimed jobs should be guaranteed against automation or outsourcing. I’m simply asking you to humanize these professions and not treat them like their all part of this blob that you despise.
On the effective rate and state rate comparison with other countries:
Other countries do not have a huge war debt to work off.
Maybe a war surcharge should be part of any tax reform to use the old rates to get a jump on paying down that big debt that politicians keep shoving in our faces.
Maybe paying an explicit war debt would calm down some of the U-S-A, U-S-A madness.
I have no idea why you continue to drop in bullshit comments. What does our war debt have to do with tax policy? Nothing. In addition, the Rs are not interested in your views on debt.
We have an R-run government. What can be done in the current environment? Nothing that you suggest will ever be done. Why is this so difficult to understand? Blue-sky unrealistic suggestions will not be followed.
The tax policy is either something that Dems will participate in or they will be ignored. If they wish to participate in this debate, then working to reduce the actual tax rate to one which is lower is a realistic, sensible approach.
Can we at least diagnose the problem?
Arguing monopolization had a thing to do with Youngstown is nuts. Youngstown got destroyed by international competition for steel. And this isn’t recent. There was a documentary called “Shout Youngstown.
This explanation by Booman is embarrassing – and I suspect everyone in that area knows it.
These plants started closing in the 70’s. In the mid-80’s the released Shout Youngstown at the Harvard Kennedy School, and then had a forum that included Robert Reich.
Made in the mid-80’s, it is on youtube.
Here:
https://www.youtube.com/watch?v=6jk4ARquynE
If you want to actually understand the last 40 years of American politics in the Midwest watch the first 10 minutes of that documentary.
Ask yourself how you would feel today given what happened then.
The Unions have been screaming about this for FORTY YEARS!. And no one ever listens to them. We get endless wonks saying they have some solution. But they never start by asking labor what it thinks. Why would they: after all the union people don’t have the right degrees.
And make no mistake. The UNIONS WERE BETRAYED at every level by Democratic Party leadership. I HEARD Robert Reich hem and haw after this documentary, and talk about “transaction costs” and then say change like this was hard but we need to become more productive.
I don’t mind criticism that I can understand.
But I have no idea what you are talking about.
I see that you have a couple of ideas in your head about our corporate tax rate, but they’re unresponsive to what I wrote.
And I don’t see how calling for a restoration of decent rail and air service to middle America makes me some kind of neocon.
Your commentary is of 3 parts:
You never bother to discuss the actual rate of taxation. So, naturally, I ignored your comments. They had nothing to do with the tax rate.
Is there anyone on this earth who could compare tax rates between countries?
Without knowing anything about it it looks like all numbers mean nothing, too many different systems, too many exemptions to even make a guess. searching for 2 minutes makes me think any ideological opinion can be satisfied with the requested numbers that fit best.
Maybe someone with better understanding than me could explain it clearly how it should be done, comparing the corporate taxrates between countries? Or is it more of an art?- where you embrace the current feeling of the public and produce the numbers required?
We have had long discussions on eurotrib about headline tax rates and real (after deductions) tax rates.
To sort of sum up:
EU countries set their own tax rates. Ireland has 12.5%, France closer to 35%. It is far from clear what the real tax rates are in various countries.
The problem isn’t your local company, because they act on a local market, but the multinational corporations. But those pay real tax rates of close to 0% through various moves. Like Apple’s HQ company in Ireland that was incorporated as a corporation not really in Ireland. Or IKEA that is in the end owned by a tax-exempt foundation in the Netherlands.
I posted a link to a documentary above on what actually happened in Youngstown.
One reason Ryan is interested in this (and there are plenty of Democrats who support lowing the corporate tax rate) is history. Part of that history was the decision in the 70’s not to invest in the plant in the then existing steel mills.
So Ohio manufacturing is something I know about since one grandfather was a UAW shop steward and the other was a Republican politician in Cleveland and a manger at a Cleveland manufacturing plant. And I was a prosecutor for a while in another part of Ohio where there WAS investment in the steel mills (eg Mansfield) in the early 90’s.
For decades there was a rough equilibrium in this country between labor and capital. Part of the reason for this was economic concentration. Unions have always fared well in industries characterized by economic concentration. This was true in the auto industry, the steel industry and the trucking industry and others. In some of these industries there was also price regulation. And there again in regulated industries unions do better (ATT, for example, is CWA, and see the airlines)
As a result, the margins in these industries were high, and as long as that was true the companies lived with the unions (though management always hated them) and everybody made money.
Enter foreign competition and technology change. Foreign competition shot the margins of the companies in the auto industry, for example, to hell. The companies became more cost conscious, and they began to look for ways to attack the unions in a serious manner.
The collapse of margins led many of these same companies to essentially leave many of these plants to whither on the vine. See what happened in Youngstown.
Ryan knows that history. So what he is looking for is a way to create an incentive to make sure the investment happens that keeps the plants competitive.
He is trying to find a way to keep what is left, and a whole lot of left of center economists would agree with him in general about this.
The problem is that there is no way to get back to the 70’s. Globalization is a fact. Technological change is a fact. Within that context labor rates will continue to be under pressure, and the rich will continue to benefit.
I saw that in Mansfield. Then Ohio Governor Voinovich handed tens of millions in tax credits to the plant, and the plant then modernized, and laid off 60% of the workforce while maintaining the same output. The plant stayed open, and in Voinovich’s defense you could argue if he did nothing all of the jobs would have been lost.
The Youngstown video talks about worker control of the mills. About this time I wrote a thesis on co-determination in Germany, where corporations have union leaders as board members. I still think longer term that is the only way capitalism can be made to work for everybody.
But it may be the truth is the balance between labor and capital will not be equalized until global labor rates equalize. And if that is true god help us.
From 1989-1997, my wife worked for a Credit Union in Youngstown. The credit union was called 717. That name came from the union number of a local plant. So I know some about the area. We lived in Cleveland Heights at the time. I worked at a local university in Cleveland.
As to your comments:
I think 20-23% would be a good rate, with no or few loopholes.
You are abandoning a rational thinking process, Booman, and simply going with the blather spewed by the Dem Party neocons. A thoughtful consideration would be helpful occasionally.
And you think companies wouldn’t use tax lawyers to exploit any loopholes that would come about re: tax reform? Booman is getting his talking points from Democratic Party neocons on this? Are you serious? Do you know that effective tax rates are actually pretty low already for U.S. corporations?
Yes, but it would take time to do that. Get the rate flat first, and make it fair for small business. Dems could get small business on their side for once.
OK, make the annual minimum tax rate for any business enterprise 15%. That will cut down on the manipulation of loss accounting.
I don’t understand how you can square getting getting the rate flat with your points 1,3,4 from above. Don’t your points suggest that the corporate tax should be more progressive depending on the size and structure of the corporation?
Shouldn’t we figure out how to treat small corporations differently than large multi-nationals to mitigate your points then figure out what rates for each type would best serve the common good of the country?
A minimum tax means that in any year a corporation would have to pay that amount instead of playing games with losses that allow people like Trump to avoid paying taxes for decades. It claws back some of the taxes that are being avoid because of the regs. It also sets up contradictory regs, which can be challenged in court. Hopefully most judges won’t want to bear the scrutiny of ruling that a corporation need pay no taxes at all.
Classic Scorpion and Frog reasoning.
Listen, shitheel: lower the tax rates on the oligarchs who own and fucking operate this goddamn country.
Then, like, later and stuff we’ll make it fair.
Get a fucking new shtick.
Of course Dems can discuss actual reforms to the corporate tax scheme of America, which is obviously broken and allows far too much leeway to CEOs and billionaire plutocrats to “manage” themselves to nonpayment of any tax.
The Right’s passionate desire for lower rates can be balanced by ending the mountain of loopholes and instituting a minimum tax to stop the ridiculous spectacle of Fortune 500 companies billionaires (self described and actual) from paying effective rates of 0%.
Perhaps a minimum tax of 10% of gross revenues would be appropriate. And no amnesty for off-shore profit hoarded to date.
In what way is ‘loopholes’ different from ‘tax policy?’
I mean, loopholes implies that these are inadvertent results of a flawed process. Is that what they actually are?
Generally (as far as I can tell), loop holes = intentional tax policy. Just a special deal for some favored industry or even a single company, wedged in by a high-paid lobbyist. And never, ever re-examined, even if the hole was plausible at some time in the (long ago) past.
There are of course exceptions—such as the (unintentional) loop hole Der Trumper’s tax lawyers found which permitted him (apparently) to pay no income tax whatsoever for 20 years(!) arising out of a single transaction in which he essentially defrauded the investors in a stock offering for his shit casino properties.
There is a NYTimes article on your points written in Jan 2014 that makes similar points. It notes that the average tax rate paid by US companies on total profits is 13%, which implicitly means a lot of taxes are being hidden overseas in lower tax jurisdictions, as compared to our statutory rate of 35%. Apple is said to pay 8.2% of total profits and we know they are holding a few trillion overseas waiting for Trump to let them repatriate it at a much lower rate.
The article also says that wages would rise if there were no income tax. ( I don’t know about that.) And far fewer businesses would find the need to move overseas or hide money there. Hence, investment would increase here. Or what do they call it – move the tax jurisdiction out of the country – reversions would end.
Some years ago an economist on the progressive side (Minsky I think) suggested there should be no income tax because it allows corporations to spend money without any returns since it is tax deductible like interest and very large salaries and fringe benefits that we pay for. Mar a Lago would have to lower their rates for off sites and such.
I posted above that corporations pay about $300b a year in taxes now, not close to the total tax bill.
Outstanding work by Phil. Goes to a general principle about infrastructure and markets.
If infrastructure of any kind is market based, it must be as strictly regulated as Swiss health care in order to allow equal access. And it must be regulated so that no one is left behind: leaving no one behind is the whole point of having infrastructure. Hiving off areas in which people can be left behind is one of the conventional niche-making tricks of entrepreneurs. That practice eventually undermines the infrastructure that they each take for granted.
The alternative to markets is actual government operation of infrastructure or of the network goods and services that support infrastructure. That too requres strong regulation, internal controls that prevent corruption, identify and eliminate actual waste effort (and not just automatic spending cuts), and abuse of the public, public employees, and public funds.
More like this from the Washington Monthly.
Listening to poor-mouthing business owners is how we got into this infrastructure predicament. Their focus is on externalizing their cost instead of making actual innovations that lower everyone’s cost.
As Grog notes, it is clear there is no relationship between corporate tax rates and job creation by CEOs, so this is stupid. But Ryan is attempting to attract some of the incompetent electorate back to the ruined brand via economic proposals.
With the intentional re-creation of monopoly power in every sector of the economy, ushered in by desperate Dems in the late 70s and accelerated by the 35+ year old “Conservative” Era, the only answer now is federal (re)regulation of all these industries (from airlines to internet platforms) as public utilities. The monopolist CEOs can no longer have carte blanche in running their monopolies, and their prices must be justified by demonstrated costs. There is no other answer because they cannot be effectively or sensibly broken up.
Unregulated capitalism destroys all it touches, except plutocrat wallets.
Trump wants to lower the corporate tax rate to 15%. If they end up cutting the rate in half, then other things equal the tax paid by corporations. could fall from $300B per year to $150B.
The sole point of the tax exercise is to squeeze “entitlements” even more so that the Social Security Trust Fund can be gutted to “pay off the debt”.
Cost out this tax reform. Gut the entire tax code and start over.
Set a flat rate of 15%. on income over $50,000.
Set up mechanisms to ensure collection and enforcement. Cost them out as administrative expense.
Put a surcharge of 20% for expenses for tax accountants, tax lawyers, and all lobbyists.
Set a war debt surcharge of 10% on all income over $1 million, individual or corporate.
My economic prediction: wealthy corporations become incentivized to make sure there are as many taxpayers (individual or corporate) with incomes over $50,000 as possible.
Also, index the tax rates to inflation.
Allocate the current percentage of total taxes that goes to payroll taxes to the Social Security Trust Fund.
What is the revenue from a scheme like that?
CEO pay has grown close to tenfold since 1980, while that of the top .1% have grown about 3.5 times. Meanwhile growth is stagnant for the rest of us.
So just what makes Ryan believe that more money to corporations doesn’t just get squandered away by more executive pay and stock buybacks instead of making them more competitive and/or paying employees?
And lets stop calling consumer- and labor-hostile policies as business-friendly.
If many more corporations were federally regulated we could ensure that their wage/compensation structures fell within certain boundaries of “equality”, like we now do with qualified employee benefit plans under ERISA.
With regulation, much is possible.
Creating the seams in the armor of benefit through which savvy lawyers can extract income. As opposed to public infrastructure in which those who would be lawyers under regulation would be patronage-appointed civil servants with interesting friends.
Is actual equity and equality possible?