The proven ability of the nation’s wealthiest individuals and corporations to collude with the federal government in order to avoid paying massive amounts in federal taxes, says economist and Nobel laureate Joseph Stiglitz, is not simply unfair and unprecedented but is actually destroying the broader economy and the nation’s once-heralded prosperity.
“Twenty million Americans would like a full-time job and can’t get one. We have growing inequality. We have environmental problems that threaten the future of our planet. I think we can use our tax system to create a better society, to be an expression of our true values.” —economist Joseph Stiglitz
In an interview with journalist Bill Moyers that airs Friday in which they discuss his new white paper (pdf) on the same topic written for the Roosevelt Institute, Stiglitz describes how the current tax code actually encourages large multinational corporations to invest abroad, hire people abroad, and keep their earnings abroad.
And because these multinationals use their outsized political influence to literally write the tax code and bend financial regulations to fit their interests, says Stiglitz, it has created a nearly complete distortion of the nation’s real economic possibilities. As he explains to Moyers:
Watch the Moyers’ interview with Stiglitz:
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And it’s not like there’s nothing to be done with that $2 trillion or more in revenue that Stiglitz says could be generated if the top one percent simply paid what the average American pays in terms of income tax and if corporations were stripped of their preferential “subsidies” and “incentives” which he has long argued should be called what they really are: corporate welfare.
“Our country needs, faces a lot of challenges,” argues Stiglizt. “Twenty million Americans would like a full-time job and can’t get one. We have growing inequality. We have environmental problems that threaten the future of our planet. I think we can use our tax system to create a better society, to be an expression of our true values.”
In the white paper, titled (pdf), Stiglitz’s argument is that even before the financial crisis that took hold in 2008, it’s not as though the average American or the economy overall was being particularly well-served by the increasing slant of the tax code to favor large corporations and the wealthy.
Though not a new idea, Stiglitz says that it’s imperative people realize the economy has long been run by perverse incentives and that the rules fueling these incentives are not natural laws of the economy or that thing called “the free market” but the direct result of corporate control of the political and legislative process.
What many tax-dodging corporations do might well be “legal,” admits Stiglitz, but the reality is that they “use their lobbyists to make sure that the law gives them the scope to avoid taxes. So, this argument, ‘Oh, we’re only doing what the law allows,’ is disingenuous. The fact is … their lobbying helped create this law that allows them to escape taxes, pushing the burden of taxation on ordinary Americans.”
And the result, of course, the reason that the rest of the economy is burdened by this behavior and these systems of perverse incentives, he continued, is because “somebody has to make up the difference. I mean, we can’t survive as a society without roads, infrastructure, education, police, firemen. Somebody’s going to have to pay these costs.”
And that “somebody,” as is known all too well by low-income and working-class America, is the rest of the population–sometimes now referred to as the 99%.
In his newly published paper that addresses these issues and calls for a new progressive tax code and end to preferential ‘corporate welfare,’ Stiglitz concludes:
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