America as the land of opportunity is under threat. America’s family farmers, small business owners, and middle class workers have long believed that if you work hard, you can get ahead. But in the last 30 years, the growing trend toward concentration of corporate power has increasingly put the American dream out of reach for ordinary citizens. Family farmers have particularly felt the wrath of consolidation as they increasingly lack open, competitive markets to sell their goods.
Until recently, both political parties in Washington ignored this problem. That is starting to change, but recent progress could be reversed if corporate tax “reform” put forward by the president and Republican establishment gains steam.
In August, President Donald Trump came to Missouri to kick off that effort, and he is now visiting more states to sell his plan. The basics are clear: massive tax cuts for millionaires, billionaires and corporations. Multinational corporations would pay zero tax on overseas profits. Wall Street hedge funds and big real estate companies (like the president’s) would get a gigantic tax loophole in the false name of “small business.” Corporate rates would be cut overall. Ultimately, ordinary taxpayers will have to pick up the bill.
Amazingly, corporate lobbying groups are running ads saying these giveaways will lead companies to invest in America, create jobs and raise workers’ wages. If only that were so.
The myth at the center of Trump’s tax plan, like establishment Republican tax plans before it, is that if you cut taxes for the wealthiest in the country, their fortune will trickle down to the rest of us. But this has never proven true. It certainly wasn’t the case after Presidents Ronald Reagan and George W. Bush cut taxes for those at the top.
It also wasn’t the case the last time Congress granted a tax “holiday” for offshore corporate profits in 2004. Subsequently, the 15 largest repatriating corporations cut 21,000 American jobs, and research and development declined. Acquisitions blossomed, though, and stockholders and executives saw share buybacks double and their high salaries grow by as much as 30 percent.
While the tax cuts were unlikely to succeed for multiple reasons, the behavior of the repatriating companies showed an economy with many symptoms of monopoly. Monopolies have little incentive to compete and invest for the future, and instead buy competitors out of the market, negotiate down the wages and pay of their workers and suppliers — including family farmers — and provide big pay packages to executives and shareholders. They also protect their power by plowing millions into lobbying in Washington (and Jefferson City).
Sadly, that’s what we are seeing across the economy today. Corporate profits have been near record highs, yet business investment in America has fallen dramatically since before 2000. Family farmers, small businesses and workers have seen their earnings squeezed as the market for their goods, services, and labor is dominated by a shrinking number of gigantic firms. And these same companies spend millions on secretive political advocacy.
The results are that the little guy and gal suffer. When two gigantic beer makers now dominate the global market, how much opportunity is there for microbrewers to get shelf space? When meat packing, grain processing and seed markets are each dominated by a couple of companies that effectively control prices and other production factors, does a family farmer even have a shot at competing?
Giving monopolies big tax cuts makes things worse. It’s like throwing gas on the fire. More cash drives more acquisitions and more lobbying, all the while handing bonuses to executives and shareholders. There is nothing wrong with doing well, but not at the expense of middle-class taxpayers who have to pick up the tab.
We can fix this. Rather than partisan tax cuts that make the monopoly problem worse, bipartisan tax reform should close corporate loopholes and end giveaways that only large, powerful interests can tap. And antitrust enforcement should focus on the long-term values of competition and democracy.
If America is to remain a land of opportunity, we need to take on the concentration of corporate power — not throw tax cut fuel on the monopoly fire.
Joe Maxwell is former lieutenant governor of Missouri and president and CEO of Family Farm Action. He co-wrote this with Andy Green, managing director of economic policy at the Center for American Progress Action Fund.