Yesterday things got a little heated on the Halftime Report when the usual suspects began that old “If we can just get tax reform done…” banter.
I’m not having any of it. Not anymore.
When I challenged the panel to describe what economic rationale there was to raise taxes on the middle class in order to lower the corporate tax rate, while slashing programs for struggling people and leaving pass-through tax rates intact, there were no serious takers. They couldn’t even attempt an argument because one does not exist. It’s clumsily crafted policy designed by ideologues to pay back the donor class, it’s not at all aimed at any of the issues faced by the labor force or those who’ve been left behind by the recovery.
Anyway, I’m not afraid to say this publicly, on financial television of all places, because it’s the truth. And I am joined now by Jack Bogle, a man who has been telling it like it is for the last fifty years. Here’s what Saint Jack had to say on the subject, via Bloomberg:
The tax proposals in Washington are a “moral abomination” because they favor corporations at the expense of workers, Vanguard Group founder John Bogle said.
“Just think about this: Corporate profits after taxes last year were the highest they’ve ever been in the history of GDP going back to 1929…And we are thinking of giving relief to the corporations at the highest levels ever. Individual wages are at the lowest level in about 15 years as a percent of GDP.”
“So we are helping people who are doing very well and doing nothing for the people doing very badly,” said Bogle. “One of the flaws is that corporations are putting their shareholders ahead of the people that built the corporation…”
“worst part of it is that corporations are making so much money now that they don’t know what to do with it. They aren’t investing in new equipment, in innovation. They’re buying back their own stock,” which helps the stock price, he said.
“I’m all for capitalism,” he said. “I’m a capitalist myself. But there is such a thing as too much.”
Josh here – you don’t have to be a tax expert to understand that the Bush tax cuts didn’t lead to anything good. Wages remained stagnant, but asset prices rose, as did the national debt, as did commodity prices, helped by Greenspan’s answer to the 2000-2002 recession, which was to keep interest rates absurdly low for an extended period of time. And then we got a crash, caused in part by people with stagnant wages making up for it with borrowing and credit.
Fast forward to today – US corporations are enjoying record share prices, record profit margins for years on end, record cash balances, record capacity for tapping the debt market, record share buybacks, record dividend distributions, record executive compensation, record valuations and on and on. Apart from repatriation, which I am in favor of, there is no reasonable case to be made that workers ought to be subsidizing a lower statutory tax rate for the Fortune 500.
And if one more imbecile points to a a drug company inverting in Ireland, I’m gonna scream.
If Bogle’s word isn’t good enough, I don’t know what to tell you.