A Corporate Wealth Tax: Making the Oligarchs Pay

John Mirisch
Mayor of Beverly Hills

It may be en vogue among a certain group to express concern about the influence of Russian oligarchs within our political system, but perhaps we should all be a bit more concerned about the home-grown variety, the Silicon Valley and tech billionaires. Given their huge wealth, influence and control over information, we need to start having serious discussions about how best to deal with their impact on our democracy, which they increasingly seem to want to co-opt with their money and power.

Their fortunes were indeed built with ingenuity, savvy and, in some cases, very sharp elbows. But they were also built on the backs of public infrastructure (notably Darpa, the defense agency that developed the internet) and within communities which allowed them to flourish. It is only right to expect these oligarchs and their corporations to pay their fair share in taxes.

With the highest paid tax lawyers and accountants and consultants and lobbyists, these oligarchs and corporations are almost as good as exploiting loopholes as at their core businesses. Just look at GoogleApple and Facebook. They have found ways to reduce tax liabilities so that they end up paying hardly any taxes at all. This is in hideous contrast with the unfathomable amounts of money they are making and sitting on. As one CEO recently bragged, tech companies are making “insane margins.”

Bottom line: It’s time for them to share the wealth.

Money is not speech and corporations aren’t people, no matter what SCOTUS says. But if corporations really are people, at least in the legal sense, then we should be taxing them the way real, live Americans of the flesh-and-blood variety, are taxed.

American citizens, namely, are taxed on worldwide income. Wherever they choose to live in the world, Uncle Sam is going to make sure you pay what Uncle Sam says is your fair share. We should inflict the same on these corporations.

In fact, some of these tech corporations are sitting on insane amounts of cash, most of which is overseas. It’s time for those corporations to finally pony up without the benefit of loopholes. The answer might be a corporate wealth tax, payable on worldwide assets and income. (As the name “corporate wealth tax” suggests, such a levy would be restricted to the largest multi-billion-dollar corporations and, importantly, would not impact small businesses). This would provide funding for social services and other measures to reduce the impacts of tech corporation fueled income inequality, including dealing with California’s housing crisis.

Of course, the oligarchs will use their money and power to lobby against any taxes and herein we have the crux of the problem. Seattle recently passed a very modest per-employee “head tax” which swiftly got rescinded as the tech companies, led by Amazon, (whose CEO was earning $230,000 a minute as of this past March), used their financial and political muscle to have the tax repealed.

And for all those who claim that a corporate wealth tax would stifle innovation, all we need to do is look to Sweden, a country of some ten million people of which I am a proud citizen. Sweden remains at the vanguard of technological innovation while income inequality is a fraction of what it is in the US. Income inequality in Sweden, which has a similar per capita income to the US, is among the lowest in the world, with a Gini coefficient of around .259 while in the US it is at .378, close to the level of developing African countries, according to a Federal Bank article.

Sweden, though known for its high taxes, doesn’t have a corporate wealth tax, but extracts revenue from high earners in a way few Americans would prefer. Raising taxes radically in America, without giving such things as free health care or university education, would simply make life much tougher for the middle class, particularly in prohibitive cost places like California or New York.

Some of the tech companies hoarding all this wealth face little or no competition and are well on their merry ways towards becoming quasi- or full-blown monopolies. Almost 170 years ago French wit Alphonse Karr noted, “The more things change, the more it’s the same thing.” This time, in a Karresque time warp, we find ourselves thrown back to the early 1900’s in which Teddy Roosevelt was confronted with anti-competitive corporate leviathans.

Today these quasi-monopolies — Facebook, Amazon, Microsoft, Apple and Google most prominent among them — seem to prefer to use their money to influence both law and policy so they can avoid having to pay taxes, income inequality be damned. And, of course, it’s not just the tech companies, but also the other multi-billion dollar corporate behemoths who through acquisition, globalization or elimination of competition constantly grow bigger like the blob in the 1957 horror movie of the same name.

There doesn’t seem to be a TR-style politician around these days on either side of the aisle (perhaps with the exception of Bernie Sanders) who is interested in the doctrine of “public interest,” and who is willing to battle corporate greed, the way TR took on Northern Securities. Today’s politicians don’t seem to be able to resist the lure of campaign donations or, for the most prominent of them, post-employment speaking fees and potential foundation baksheesh.

And yet public interest demands that these mega-corporations pay their fair shares rather than dictate policy which will increase income inequality and further move the oligarchy towards a modern-day version of feudalism.

In some cases, it is quite shocking how some self-styled “social justice warriors” allow themselves to play a supporting role for oligarchy. “Color of Law” author, Richard Rothstein, for example, when asked what Google can do to address discriminatory housing policy, didn’t respond that Google should share its wealth to create affordable housing (even after a Google employee threw him a softball by talking about Google’s “$50 billion in the bank”) or be taxed at a higher level to fund government services or do anything at all about income inequality; his response, shockingly, was that Google should use its wealth to lobby Sacramento to eliminate local zoning ordinances against the will of individual communities, thereby creating what Rothstein considers to be “solutions” to problems largely created by the tech companies themselves. That’s an odd position for a supposed social justice warrior.

Similarly, our Sacramento politicians, mostly self-described progressives, are willingly complicit in attacks on local control, as they increasingly attempt to impose policies on local communities in pursuit of corporatist agendas. Clearly, corporate lobbyists are also looking to erode local control and the self-determination of our individual communities because it’s a lot simpler for them to control Sacramento and its politicians, far away from the scrutiny of our daily lives within our wide-ranging and diverse state.

Corporations may be people, according to SCOTUS, but people are definitely not corporations. It’s time to put people over profits and profiteering. A meaningful corporate wealth tax would allow us collectively to do just that by providing much needed funding for our communities, by reducing income inequality and by building infrastructure which would benefit communities, not just a select few elite corporations.

Cross-posted at New Geography.

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