[PEN-L:4856] Assets taxes/And cut corporate profits taxes?

["Michael A. Dover" <mdover@xxxxxxxxx>]

Having already proposed that a more modest assets tax of 1% would be a
progressive and realistic agenda, I want to react to the comments about
the corporate profits tax.  Not being an economist, but rather a
progressive social worker and sociologist in training, I'm not expert on
these matters.  But it is intriguing that some pen-l participants point out
the weakness of the corporate profits tax.  I recently wrote a brief
little paper with a counter-intuitive proposition.  I hypothesized the
following: that corporations made conscious decisions as to whether to
support public social welfare systems (health insurance, retirement
systems) or occupational social welfare systems (employee health and
pension programs) for a variety of reasons, but among them is the
following: they begin to take off when there has been a recent major
increase in the level of corporate profits taxes. Historically, this was
partially the case apparently in the WWII and Post WWII period.  When
during the war there were prohibitions on wages increases, employee
benefit increases were favored but this wasn't just a matter of evading
wage controls.  Here's the thinking: you've got a pre-tax profit dollar.
If the corporate profits tax is 50% (to exaggerate), you'd be left with
only 50 cents and pay 50 cents.  But if you spent 50 cents on employee
benefits (and according to one sociologist u.s. corporations spend MORE
on employee benefits than there post-tax profits!), you'd only have to
pay 25 cents in taxes.  Now why would you want to forego 25 cents in
post-tax profits?  Because you are using for corporate purposes 75 cents
of your dollar, rather than only 50 cents.

Now, if corporate profits taxes went down to 25%, you might have less
incentive to forego profits.  You might like to eliminate or cut employee
benefits and take in more in cash profits.  But there's a hitch.  One of the
reasons you invest in employee benefits is to have a loyal work force and
a health work force.  You can't have the latter without health coverage.
You can't "retire" (read lay off) employees as easily if they have no
post-retirement income, so you need social security.  You need it
national so you don't have states competing with each other to undercut
the state where you are headquartered.  Also, perhaps like the auto
industry you have a graying work force whose per capita health costs are
higher than the national average.  Eureka!  Suddenly you the capitalist
might favor PUBLIC social insurance.  Sure, you'd have to pay more taxes
to get it, but you'd have more flexibility in downsizing, less of an
internal state to finance, more economies of scale, etc..  Thus, the
counter-intuitive conclusion: That corporations might be induced to less
aggressively oppose or even support public social welfare including
national health insurance if it were tied to a lower corporate profits
tax rate!  Thus, a progressive proposal for change might include:

1. National assets tax circa 1%.
2. Signcificantly reduced corporate profits taxes, which larger
reductions for companies involves in productive as opposed to speculative
endeavors or which reward other elements of an industrial policy.
3. National health insurance ("Medicare for all"), administered like
Medicare now is in each state but with one company handling claims of
S.S. recipients, one children and one other adults, thus buying off
insurance company opposition.  Funded by a social insurance tax as S.S.
now.  By the way, anyone ever try to advocate for a Medicaid as opposed
to a Medicare claim to be paid?  The private insurance companies pay
claims much more effectively than state bureacracies, unfortunately.
4. Enhanced S.S.I. with eased eligibility for mental and substance abuse
disorders and levels of payments permitting basic need satisfaction.
5. Full employment with government and government-subsidized employment
of last resort.
6. Massive support of before and after school care and head start
programming based in the public schools.
7. Simplified but steeply progressive personal income tax.

Clearly, a progessive agenda must be willing to engage in "new thinking"
and not the same kind of thinking that passed for a left agenda.  I'm
going out on the limb here by proposing a CUT in corporate profits
taxes, which would be traded for corporate support for bringing the U.S.
in the modern age of social welfare!  I also had the gall to state that
in my experience, the various insurance companies including the Blues
in most states do a fine job of paying Medicare claims.  They have the
actual know-how and experienced staffs to do it.  To move to a national
health insurance system, a claims-administering system would still be
needed, and needed quick. No way could the public sector gear up quick
enough to handle it, and we have to think about the dislocation to the
employees currently working in the private insurance sector if it weren't
done that way.

If we don't do this soon, international competitive pressures
will be so strong that one country
after another in the post-Cold War era may abandon these systems.  During
the Cold War, there might have been elite consent to demands for national
social welfare systems, as there was systemic conflict and competition
with the Soviet bloc.  There is no such "threat" now, and such consent is
drying up rapidly!  An alternative combination of strong united demands
and economic/political inducements is necessary at this time.