The current major item on Biden’s agenda is his infrastructure proposal. Debate is over what should be included; conventional infrastructure such as roads and bridges, or an expanded version including broadband, child care, eldercare, and pre-K education. Quibbling over whether the expanded version is “infrastructure” is pointless. What’s relevant is whether these items are significant in restoring the economy to full capacity. They are, especially in getting women back into the paid work force. But to get a bipartisan bill passed, Democrats will likely have to confine legislation to the traditional roads and bridges.

The other major stumbling block to an infrastructure bill is how it is to be paid for. During the pandemic, small businesses went under, lower and middle income people suffered unemployment, tremendous inconvenience, and hardship, including many experiencing food insecurity. This, while some 650 American billionaires saw their net worth increase by more than a trillion dollars. Biden is asking that corporations and individuals who prospered mightily, while others suffered, cough up some tax dollars to help pay for infrastructure that is much needed, and will provide millions of good paying jobs.

As the Trump/Republican 2017 tax bill granted unneeded tax cuts to the nation’s very wealthiest, and reduced the top corporate tax rate from 35% to 21%, Biden proposes that the corporate tax rate be raised to 28%. This is still well below the previous 35%, and relatively low, as the corporate share of federal revenue has fallen to 6.5% compared to 9% in previous years. Corporations themselves would gain in multiple ways from the improved infrastructure that they are asked to help pay for.

The very notion that corporations and individuals who prospered so handsomely during the pandemic actually pay a few more bucks to help pay for the bill has brought screams of protest from Republicans. No Republican support for the bill as long as corporations have to pay an additional thin dime, while still privileged with a lower tax rate than prior to the Trump/Republican tax bill. And, “how terrible” that those 650 billionaires whose net worth increased by over a trillion dollars during the pandemic should have to cough up a few bucks.

So much for the equity argument, that those who have profited throughout the pandemic should bear part of the cost of a much-needed infrastructure upgrade. The opponents of any tax increases for corporations and the Nation’s wealthiest throw other specious arguments into the mix.

Perhaps the most ridiculous is former Trump Chair of Economic Advisors, Kevin Hassett’s assertion that employees bear the entire incidence of corporate taxes. He led the argument that the Trump tax bill would significantly boost average annual household salary or wages. As most economists had argued, it did not.

While there is debate over ultimate incidence of the corporate tax, the Tax Policy Committee of the Brookings Institution, along with the Congressional Budget Office, asserts that 80% of the burden falls on capital and shareholders. Recall that although some 55% of Americans are shareholders of some kind, the bottom 90% of income-earning households own only about 12% of stocks while the wealthiest one percent own 57%. And, these shareholders have done very well during the pandemic.

Some critics of the corporate tax argue that corporations will simply pass on the tax to consumers as higher prices. In contrast to higher prices of inputs such as labor and raw materials, corporate income taxes are not costs of production. Nevertheless, corporations may use higher corporate taxes as an excuse for raising prices in order to maintain after-tax profit margins to satisfy shareholders. But if they are able and willing to raise product prices, they hardly need higher corporate income taxes as an excuse.

Then there is the argument that if US corporate taxes are higher than those taxes in other countries, corporations have the incentive to book more of their profits off-shore. To prevent corporations from gaming the system, Treasury Secretary Janet Yellen proposes an international agreement that nations impose similar corporate tax rates. During a recent interview, Congressman Kevin Brady, Ranking member of the House Ways and Means Committee, threw cold water on that by insisting that other countries would not be willing to “penalize” themselves. What Brady overlooks is that if all countries played by the same rules, no country would be so “penalized,” as corporations would be deprived of playing one nation against another.

In view of the incessant whining about the corporate tax, why not just eliminate it and replace it with decently progressive individual income tax rates. Although sensible in theory, with such political opposition to higher marginal tax rates for the wealthy, it is a political non-starter.

The average Fortune-500 CEO salary tops $12 million. If, for example, the marginal individual tax rate on the last two million were raised from 37% to 50%, or even to 75%, they could still enjoy their yachts, vacation homes, first class air travel, and everything they enjoy now.

Opponents of such “unfair” treatment of the wealthy insist that higher tax rates on the last million would reduce incentives of high income recipients to work.

This is pure eyewash. Heirs to large fortunes living on dividends aren’t working anyway. The hard driving corporate executive elbowing is way to the top would still do so. The Hollywood actor would still seek stardom. Star athletes who make more money than most workers earn in a lifetime would still be motivated to excel. Higher taxes on the last million dollars would in no way discourage superstars, or those striving to achieve that status, from exerting maximum effort. 

So spare us the eyewash — those people are so competitive that they would crush their grandmother’s instep to beat her at shuffleboard. 

The cold reality is that as long as politicians, and those who support them, believe in trickle-down economic snake oil, and that protecting the ultra-wealthy is essential for economic growth, tax fairness is a long way off.

— John Waelti’s column appears every Saturday in the Times. He can be reached at jjwaelti1@tds.net.