But such arguments should get a lot harder to sustain, once the political world starts focusing seriously on the details of the corporate tax hikes in the package.
Case in point: Two progressive senators are set to unveil a new plan to tax stock buybacks, in which corporations purchase back shares in themselves as a way to channel additional money to shareholders.
The details of the plan are as yet unknown, but the office of Sen. Sherrod Brown (D-Ohio) confirms to me that it will be revealed this week. Brown will champion the plan with Sen. Ron Wyden (D-Ore.), who as chairman of the Finance Committee is assembling the corporate tax increases for the $3.5 trillion bill, which Democrats hope to pass by the simple-majority “reconciliation” process.
The plan to tax stock buybacks is one of numerous proposals Democrats are considering to offset the reconciliation bill’s spending, Bloomberg News reports. These proposals are expected to include an increase in the corporate tax rate, an effort to capture more revenue from multinational corporations that shelter profits abroad, taxing capital gains like regular income, and more.
If and when this proposal gets debated, it will be harder for centrist Democrats to hide behind platitudinous objections to spending. That’s because specific proposals can both generate revenue and have policy value of their own, and centrists will have to say which of these they oppose and why.
Stock buybacks occur when companies purchase back stocks, which transfers money to wealthy shareholders and in the short term might raise the price of stocks still on the market, enriching shareholder value more.
Many tax experts see these as problematic. Some say they decrease the amount available for productive investments, including wage increases to workers. Others argue they are not taxed the way shareholder dividends are, costing us revenue and starving public investment.
The new proposal from Democrats will address these things. It’s not clear how yet — they will either seek to apply an excise tax on buybacks, or treat them as taxable dividends to shareholders — but that’s the general goal.
In a statement sent to me, Brown said the fundamental goal is to tax corporations when they “transfer wealth to Wall Street” by using accounting trickery unavailable to working people. As he put it: “Corporate greed is fundamental to the Wall Street business model.”
With stock buybacks soaring, this would be another way to bring in revenue to offset the spending in the reconciliation package, which will include investments in child care, family supports, education and combating climate change, among many other things.
“The fact that we can raise billions through a small tax on share buybacks just goes to show that there’s no excuse for congressional Democrats to shortchange the critical investments in the reconciliation bill,” Seth Hanlon, a senior fellow at the Center for American Progress, told me. He estimates this could raise as much as $150 billion or more over 10 years.
The key point here is that when proposals like this one start to get debated in earnest, it will be much harder to oppose the reconciliation bill’s spending levels in an abstract way.
We constantly talk about the reconciliation package’s proposed corporate tax hikes as merely a means to “pay for” the plan, as if they have no intrinsic worth of their own. But tax reform is a laudable goal in its own right and would accomplish its own goals, far beyond “paying for” Biden’s plans.
As a new Center for American Progress report details, those proposals would address deep inequalities and imbalances that are baked into our tax code and political economy. Among them: Billionaires often pay little in taxes, relative to their real wealth; corporations minimize tax burdens through tricks such as parking profits offshore; the wealthy and corporations avoid paying what they already owe; wealth and investment income are privileged over labor income; and on and on.
So when this debate gets going, centrists who want to downsize the reconciliation bill will have to explain why they oppose specific proposals to address these problems — and if so, why they support keeping elements of the status quo unchanged.