(Editor Note: This is the first of an on-going series reviewing the GOP and President – elect economic programs, their impact on working people and ideas for a progressive response)
The View:
The GOP and President – elect unveiled a proposal for ‘creating millions of jobs’ with a $1 trillion infrastructure project. This initiative is nothing more than a huge tax give away to global corporations, construction companies and gift to private investors. Over $137 billion dollars in taxes would be lost, critically needed to serve the needs of the working class. The Action is to write (letter is best) to your congressional representative and senator and let them know that you expect a no vote on this scheme for corporate welfare.
The Story:
The electoral administration has announced a $1 trillion infrastructure project to ‘jump start the economy and create millions of jobs’. But will it?
Who is helped by this initiative? This is always the first question to ask.
The initiative is based on private funding of infrastructure projects. It calls for an 82 % tax credit on the equity invested. The investor is only risking 18 % of his/her principal to gain a forecasted return of at least 10 % to investors – a nice return with interest rates at 2.0 % on 10 yr Treasury bond. Or compared to the return of workers get on CDs of .01 %.
Another corporate giveaway to construction companies is to tax their profits on these projects at 15 % versus the corporate rate of 35 %. These companies are already enjoying investment credits, loss carry forwards and other real estate tax incentives.
Yet, an even bigger giveaway to global corporations is to repatriate their unpaid taxes when they bring offshore funds back to the US where they really owe 35 % corporate taxes and use the 82 % tax to offset their corporate tax payments – effectively paying no tax on their offshore funds! As Wilbur Ross, private investor and Prof. Peter Narrvaro of UC Irvine say in their proposal ‘so at the end of the day they (corporations) have an infrastructure equity investment and no tax bill while the US has more and new infrastructure.
Helping corporations to escape their fair share of taxes is ludicrous! Corporations pay only 1 % of US GDP today compared to 7 % in 1954 says an OMB study.
This is a huge giveaway to tune of $137 billion in tax funds actually needed for student debt relief, job training, free public college education for all students, tax credits for child care to help families escape poverty or job corps to work on key projects in poverty areas of the country.
This initiative is actually a huge tax cut for corporations packaged as an infrastructure project and sold to the public as a ‘job creator’. The vast majority of public projects do not have cash streams – ie toll roads. So, it is not clear vast number of new jobs will be created from a possible small percentage of ‘cash stream’ projects.
Who wins? The Elite – major investment companies and corporations, little goes to the working class.
Yet the working class in this country spends the most number of hours of any developed country trying to escape poverty, noted here by OECD (right click to enlarge):
We need to be helping families with good jobs, paying enough to support their family life and opportunities for their children. Families are the building blocks of our economy and our country.
We need what Pope Francis calls a ‘moral economy’ that works for all people – that is our yardstick for this new administration
We don’t make America great again by focusing on making the top one tenth of 1 % even richer. The top one tenth 1 % holds as much wealth as the bottom 90 %. This is the highest concentration of wealth since 1929. We experienced the worst economic crash in the history of this country then. Today, we are faced with a similar crisis where millions of dollars are not in the hands of families, students and those building households to purchase appliances, furniture, houses, cars and other goods. Yet, at the same time they are caught in an health care cost squeeze dictated by corporate interests as well.
in 2013, Pope Francis wrote with passion and insight on this topic when he said:
“The current financial crisis originated in a profound human crisis, the denial of the human person… (we have a) dictatorship of an impersonal economy lacking in truly human purpose. Money is here to serve not rule.”
The Action:
- Write (a letter is best) to your congressional representative or senator and make the point that you are not taken in by this disguised initiative and you want a No vote if it comes to the floor.
(Editor Note: References appear for this blog in the Research tab under GOP Infrastructure and Pope Francis – Money is Here to Serve.)