FOR IMMEDIATE RELEASE
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How Our Tax Code Undermines Small Business and Fuels Corporate Concentration
[WASHINGTON, D.C.] – As President Biden and Congressional Republicans debate taxes and deficit reduction in the looming debt ceiling showdown, one element of our tax code is sure to be overlooked — the role it plays in fueling corporate concentration. In a new brief from the Institute for Local Self-Reliance (ILSR) and the Roosevelt Institute, authors Stacy Mitchell and Susan Holmberg make the case for why tax policy should be viewed as more than a fiscal tool, but also an antitrust weapon.
Titled “Tax Dodging is a Monopoly Tactic,” the brief details the history of tax policy opening the door for large corporations to exploit loopholes and lobby for special rules and subsidies that placed small businesses at an unfair disadvantage. It points to Texas forgiving a $269 million Amazon tax bill, and the corporation paying an effective federal income tax rate of six percent when the statutory rate is 21 percent, as examples of how tax policies favoring bigness not only make the Amazon’s of the world uber profitable but also unnervingly powerful at the expense of small businesses and communities.
The brief also explains how misaligned tax policies incentivize bad behavior on the part of corporate titans. It recalls Amazon instructing employees to carry business cards of an Amazon subsidiary — rather than Amazon.com — so the employees could not be tied to Amazon’s retail operations in the state, avoiding tax liability therein.
“The idea that giant corporations like Walmart and Amazon grew to their current dominance by virtue of innovation and sheer business acumen is a myth,” says Mitchell, a co-director at ILSR. “In reality, these companies were simply more willing and able than their competitors to exploit loopholes and other unfair advantages, and to use aggressive lobbying to cement and expand those advantages.”
The authors conclude by highlighting a tax policy agenda that would serve as a means to corral excessive market power and galvanize a populist base that used to clearly align with the Democratic Party. The recommendations include ending corporate subsidies at the state and local levels, closing the dark store property tax loophole, taxing deliveries, adopting worldwide combined reporting, raising federal taxes on shareholder payouts, and implementing a progressive corporate tax rate.
“It was no historical coincidence that in the period when the first two major pieces of U.S. antitrust legislation were enacted, Congress also authorized the first corporate income tax as an explicit check on the power of giant corporations,” says Holmberg, an economist and a senior researcher and editor at ILSR. “It’s time to revisit and reimagine the proactive role tax policy can have in enabling fair competition, tackling concentrated markets and in turn driving productivity and innovation, lowering prices, and fueling more and better jobs.”
The Institute for Local Self-Reliance has a vision of thriving, equitable communities. We are a national research and advocacy organization that partners with allies across the country to build an American economy driven by local priorities and accountable to people and the planet.
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