Sen. Elizabeth Warren (D-Mass.) is on the warpath again.
Not content to thrust federal bureaucrats into the hearts of American businesses, as she promised in her Corporate Accountability Act last fall, or to break up our big tech companies, as she more recently suggested, Warren now wants to clobber corporate competitiveness and sustainability with a big, fat new tax.
{mosads}Just as American businesses begin to breathe again and corporate investment and U.S. productivity begin to rise again, she submits this terrible idea.
It’s an idea not likely to boost Warren’s mediocre approval ratings. She currently has a nine-point favorability/unfavorability deficit, according to RealClearPolitics; Sen. Bernie Sanders (I-Vt.), by comparison, enjoys a 10- to 30-percent positive rating.
She can’t seem to rise above single-digit support, even in neighboring New Hampshire, where she currently is in fourth place.
Maybe Warren’s poor rankings stem from her incessant and angry attacks on American corporations which, after all, employ about 40 percent of our country’s private-sector workforce.
Warren has proposed a hefty 7-percent new tax on the roughly 1,200 American businesses that earn more than $100 million in profits. She claims that her Real Corporate Profits Tax would raise about $1 trillion in the coming decade, 30-percent more than under our current regime. It would undue much of the positive impact of the Tax Cuts and Jobs Act of 2017.
Her motive is that she wants big companies to “pay their fair share” because after all, as she repeatedly claims, corporations and billionaires have rigged the system. Specifically, Warren wants to apply the tax to companies’ global after-tax income as it is reported on their financial statements.
The purpose is to weaken the tax savings from investments, for example, that under the new GOP tax bill are immediately deductible against income for tax purposes. It would also counter corporate efforts to funnel profits into lower-tax locales overseas.
Warren’s overall position is that companies employ phalanxes of lawyers and bean counters whose mission it is to save on payments to Uncle Sam and his cousins around the world. That, she thinks, allows them to get away with murder.
There is no doubt that international firms manipulate their tax reporting to minimize payments and that there are deductions and credits that allow numerous firms to pay little in U.S. taxes.
For instance, the government provides renewable energy production tax credits to alternative energy firms and depletion allowances for fossil-fuel companies. Also, generous treatment of stock option expensing helps Amazon and others lower their tax bills.
Another tax break, the ability to quickly depreciate capital investments, is vitally worthwhile. Warren’s plan would specifically target companies that invest heavily in innovation and capital equipment — tech companies like Netflix and Amazon, which pay low taxes mainly because of their sizeable capital spending programs.
She is targeting, in other words, the very companies that are keeping the United States in the forefront of innovation, creating jobs and moving our country forward. She wants to roll the clock back to the Obama era.
Under President Obama, the economy slowly recovered from the financial crisis, the worst recession in our lifetime. But there was one ingredient missing during those eight years: capital spending by businesses.
The consumer rebounded, and jobs were added, but without capital investment, the economy never achieved the kind of growth and productivity gains that would thrust it into second gear and push wages higher.
Company CEOs held back from increasing their long-term capital plans, worried in the early years about demand for their products and then concerned about the blizzard of rules and regulations the Obama White House rained down on our industries. Uncertainty was the order of the day.
When President Trump was elected, consumer and corporate optimism immediately recovered to levels never seen under the previous administration.
In recent months, that rebound in confidence, coupled with the GOP tax bill, which upped incentives for spending, has led to rising corporate investment and, finally, an increase in productivity. Real wages, which ultimately depend on higher productivity, are at last gaining momentum.
That was how the tax bill was supposed to work; that is how it is working.
Sen. Warren is not happy about that. She wants to raise corporate taxes, firm in her conviction that Uncle Sam will do a better job of spending the funds harvested than our best-run and most productive corporations.
Her latest plan fits with her earlier proposals, most of which are angry demonstrations against our most successful corporations and individuals.
{mossecondads}Here’s what’s really at play: Elizabeth Warren is struggling to gain momentum in her quest to be the Democratic presidential candidate 2020. She is drowning in the sea of 18 contestants, many of whom have outflanked Warren on the left with outlandish proposals like the Green New Deal.
Recent polls show her tied for fourth in Iowa, demoted by a surging Pete Buttagieg, and, even worse, she came in third in a recent survey in Massachusetts, her home state, with only 14 percent of voters picking her as their preferred candidate. That’s not promising.
Republicans have a formidable campaign pitch going into 2020. They will tell voters happy with record-low unemployment and rising wages that Democrats want to undo our country’s progress. Elizabeth Warren makes their case for them.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. For 15 years, she has been a columnist for The Fiscal Times, Fox News, the New York Sun and numerous other organizations.