Business leaders made plenty of headlines over the past year as they stood up for Black communities and social justice. In January, many also spoke out while cutting the purse strings to politicians that aligned with voter suppression efforts and the U.S. Capitol breach. But as quickly as these corporate executives took a stand, many were fast to retreat as state legislators across the country became even more emboldened and passed laws that made it tougher for citizens to cast their ballots in elections.
In the meantime, even though a solid majority of Americans support the massive infrastructure bill the White House has proposed, the U.S. business community is expressing opposition to any such plan — largely because the bill would ask companies to foot some of the bill through an increase in the U.S. corporate tax rate.
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Here’s the problem: Somehow, all of these infrastructure investments have to be paid for, so look at the broader context. U.S. corporations’ share of contributing tax revenues dropped from 32 percent of all collected federal taxes in 1952 to 10 percent in 2013. Now, according to the Tax Policy Center, that percentage stands at 6.6 percent.
The reality is that corporations would benefit from improvements in the country’s infrastructure, as well as a more skilled and healthy workforce. Nevertheless, many companies and their lobbyists have claimed that the proposed increase in the corporate tax rate, from 21 percent to 28 percent, would hamper the economy and depress wages.
The problem with that economic argument is that the 2017 tax cuts did little but inspire stock buybacks while wages for many workers remained stagnant even before the pandemic hit. And looking at the bigger picture, CEO compensation soared by 980 percent between 1978 and 2019, according to at least one estimate, while rank and file workers’ wages only creeped up 12 percent over the same period.
Jennifer Rubin of the Washington Post, hardly a left-winger, summed it up in a recent column:
“If corporations do not exercise self-restraint and translate platitudes into action, you can bet on a political reckoning. If corporations want to stave off a true populist rebellion, they should consider some self-imposed constraints including significant limits on CEO pay in years of layoffs and economic losses; a permanent cutoff of contributions to anti-democracy politicians; an action plan to support voting rights that includes paid time off to vote, lobbying for the John Lewis Voting Rights Advancement Act and ending financial support for state and federal lawmakers who push legislation that harks back to the days of Jim Crow; and an end to their histrionic opposition to any corporate tax hike.”
Business leaders across all industries have an opportunity to stand up and do what’s right.
State legislators considering laws that would absolve motorists of any responsibility should they “unintentionally” hit protesters? Insurance companies, for example, could at a minimum lobby against such laws or make it clear they would refuse to pay any of these motorists’ claims. On the equity front, companies could make a fundamental commitment to transform their hiring practices, instead of making nebulous promises that would be fulfilled by 2025, and align with local efforts such as the Greater Washington Partnership’s accelerated push to drive inclusive growth.
Instead, we’re seeing companies step back from the bold pledges they made a year ago as they appear chastened by politicians on Capitol Hill — rather than proving they will follow through on their commitments, many of which were financial in nature. Speaking of finances, during a difficult year, hardly any company executives shared in the nationwide sacrifice. Together these actions don’t only make them tone deaf: Companies and their executives can expect more investor revolts in the coming year, too.
Image credit: Romain V/Unsplash
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's worked an lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.