by Linda Beale
Senators Levin and Isakson: millionaire surtax vs corporate repatriation subsidy
The PBS News Hour last night interviewed Senators Levin and Isakson on the jobs bill (video and transcript available here).
Isakson was first off. He sounded like a right wing sound bite machine: we’re overregulating businesses so we need a “time out” on regulation. And we need to pass a repatriation tax holiday so businesses can get the money they need to invest and create jobs.
Levin was asked what he thought about that. He didn’t even comment on the repatriation sound-bite–after all, he has a report just out that investigates the idea of repatriation and concludes it was a losing proposition. See Repatriating Offshore Funds: 2004 Tax Windfall for Select Multinationals, Permanent Committee on Investigations Majority Staff Report, Senate (Oct. 11, 2011) (listing a series of findings showing that repatriation failed to accomplish its goals).**
But Levin did respond to the “it’s regulations and taxes that are killing job creation” GOP mantra. A recent poll of small business owners showed that small business owners aren’t worried about regulations or taxes. They just need customers. So you can help things out by helping small businesses and helping people become customers.
Makes sense, doesn’t it? It’s certainly an argument made here on ataxingmatter many times: the way to create customers is to stop the collapse of the American middle class with programs like infrastructure projects.
Woodruff then asked Isakson what he had to say to that. His response–yeah, well, the vote we have tonight is the pay-for–a surtax on millionaires. And there are 392,000 small businesses that a surtax on millionaires is going to hurt.
So now Woodruff asks Levin what about this argument that the surtax is gonna hurt small businesses.
Levin set the facts straight on his colleague’s claim that a surtax on millionaires would hurt all those small businesses. He said quite clearly that the facts show that only a very small percentage of small business owners earn the million that would put them in the group subject to the surtax. So the issue is taxing millionaires, whose share of the income has skyrocketed in the last few years compared to the middle class, which has stagnated. The surtax would mainly hit the overpaid CEOs of big corporations, etc.
Funny, Judy Woodruff (an undergraduate classmate of mine back at Duke, by the way) didn’t blink an eye. You’d think the next question to Isakson would be–given the fact that only a tiny proportion of small businesses would be subject to the millionaire surtax, Senator, a fact that has been pointed out numerous times, why do you insist on claiming that it would hurt all small businesses. But she didn’t. The PBS station is worried about appearing “balanced” and that means you can’t call a fact a fact and point out that a presenter is stating something that isn’t supported in the facts. You let an interviewee do it, if they can get it in, but you let the other side get by with continuing to repeat its fact-less sound bites.
So Senator Isakson’s response was:
[Senator Levin’s] response to that question just proves this is all about political messaging and really doesn’t have anything to do with purpose, because if they really cared about small business, they would exempt limited liability corporations, S-corporations and sole proprietorships from the application of this tax. Then they’d only be taxing millionaires. But they’re going after small business as well.\
Now, folks, that’s a ridiculous response. (Woodruff didn’t say that, but I will.) It’s ridiculous because Levin gave the facts–small businesses don’t complain about regulations, most small businesses don’t make millions and wouldn’t be subject to the surtax. And Isakson had the gall to call that factual response “political messaging” , even while Isakson continued with his GOP soundbite political message campaign of implying that small businesses need to be protected from the millionaires surtax!
Note also that Isakson suggested that tif there had to be a surtax, it should exempt LLCs, S corporations and sole proprietorships. He offered no justification whatsoever for that terribly broad exemption (other than the proffered “it’ll hurt small businesses that Levin already soundly defeated). If you’re making millions from your business, you are successful enough to pay the tax. If you are not, you won’t have to pay the tax. If you exempt LLCs (mostly operated as partnerships) and S corporations and sole proprietorships, you are exempting a lot more than small businesses! Those include hedge and private equity funds (some managers of which make hundreds of millions a year), real estate partnerships, huge businesses operating as sole proprietorships, and people like John Edwards who make millions through their S corporations etc. etc. etc. If you couple that with the zero taxation on capital gains that most on the right are pushing for, that’d likely mean that the CEOs of multinational corporations would be the ONLY millionaires and gazillionaires that the tax would hit!
But did Judy follow up along those lines? Nope. Instead she asked Isakson whether the country doesn’t need stimulus rather than cutting at this fragile time for the economy.
His response was to deliver the right wing political message yet again:
1. the right’s response to the fact that the last stimulus made a huge difference–a claim that it didn’t solve tthe problem permanently (with the implication that we might as well not have done it). Says Isakson (paraphrasing): Last bill paid teachers, but once the bill is gone, there’s no money to pay them. (Implication–the stimulus was useless. I doubt that the teachers whose jobs were saved for a few years would agree or the students who were saved from overcrowded classrooms or the lack of a music program.)
2. the right’s response to the need to enact a stimulus rather than cutting–we’ve got a debt problem and a debt crisis. Isakson says “we’re at the breaking point on leverage” so he wants to “inspire the private sector to reinvest in our country and reinvest in businesses.” (of course, this overlooks the fact that the “debt crisis” was caused by right-wing obstructionism. or that the US Treasury can borrow now at the cheapest rate we can expect to see forever once this crisis ends–we should borrow cheap while we can, spend it on infrastructure and job creation. It also roundly ignores the historic pattern that businesses won’t invest in US business when (a) we allow them to expatriate assets to create businesses abroad without taxing them on the built in gains in those assets, (b) we allow them to fire workers with ease because we’ve so weakened our labor laws that workers find it almost impossible to form unions and have any negotiating power with their bosses and (c) we continue to give businesses tax breaks for mergers and consolidations that create multinational super businesses that have no loyalty to the country (Jeff Immelt said as much in the previous night’s NewsHour broadcast).
**The report lists the findings as follows:
1. U.S. Jobs Lost Rather Than Gained; 2. Research and Development Expenditures Did Not Accelerate; 3. Stock Repurchases Increased After Repatriation; 4. Executive Compensation Increased After Repatriation; 5. Only A Narrow Sector of Multinationals Benefited; 6. Most Repatriated Funds Flowed from Tax Havens; 7. Offshore Funds Increased After 2004 Repatriation; 8. More than $2 Trillion in Cash Assets Now Held by U.S. Corporations ; 9. Repatriation is a Failed Tax Policy
originally published at ataxingmatter