By Richard Trumka
Most voters agree that big corporations and the wealthy should start paying their fair share in taxes. But of course big corporations and the wealthy don’t want to do that. They want to pay less, and they are used to getting their way. So what do you do?
Some people in Washington think the answer is a “grand bargain,” in which Republicans agree to stop protecting millionaires from having to pay a single penny more in taxes. In return, Democrats agree to cut Social Security, Medicaid and Medicare benefits.
That doesn’t sound like a bargain to me. It sounds more like working people getting ripped off.
Let’s not forget how we got here. The richest Americans have been getting richer for decades, while the wages of working people have barely kept up with inflation. Then tax cuts for Wall Street and the wealthy threw the economy even more out of balance. Now economic inequality is the highest it has been since the Great Depression.
Even worse, some of the tax breaks are doing real harm to our economy. Right now, corporations can lower their tax bill by moving factories to lower-tax countries.
Eliminating the tax subsidy for offshoring would raise $583 billion over 10 years. That’s not chump change. That’s money that could be used to invest in education and infrastructure, put people back to work and lay the groundwork for long-term economic prosperity.
Right now, this idea is not taken seriously in Washington because Wall Street doesn’t like it. But the American people are overwhelmingly in favor. Surely that should count for something.
Asking Wall Street and the wealthy to pay their fair share is not only the fair thing to do, it is also necessary to fix the economy. It would reduce inequality, which has been acting as a drag on economic growth. Reinvesting these revenues the right way could also put more buying power in the hands of the middle class, which was once the secret of America’s economic success.
The grand bargain takes us in the opposite direction. Cutting Social Security, Medicaid and Medicare benefits would increase inequality and undermine consumer buying power.
Some people tell us we don’t need to worry about any grand bargain. They say that Republicans’ refusal to tax millionaires and big corporations means there will never be a grand bargain that cuts benefits.
But that means big corporations and the wealthy will never have to pay their fair share of taxes. Or it means our only hope of getting them to pay their fair share is to cut benefits eventually.
Let’s face it: the grand bargain is a dead end. If we want to rebuild our economy, raise wages, put America back to work and rebuild the middle class, we need to set a different course – sooner rather than later.
Richard Trumka is president of the AFL-CIO.