Credit Gary Cohn for being straight about who would benefit from the Republican tax plan. In an interview with CNBC, Donald Trump’s chief economic adviser revealed that the “most excited group out there are big CEOs.” As well they might be. The proposed cut in the corporate tax rate means greater profits and thus higher share prices, which would be further boosted by loosened restrictions on stock buybacks. Chief executives whose compensation is tied to share performance would therefore gain directly, and thanks to changes in the rate structure would see their taxes on this income reduced. But their employees would get little to nothing out of the arrangement, according to the nonpartisan Center for Budget and Policy Priorities, and once the modest credits for lower- and middle-income earners expire a decade from now, they’d face a tax hike. That’s to say nothing of the likely explosion of the deficit, which the very Republicans who lit the fuse could then cite as justification for cutting Social Security, Medicare, Medicaid, and other programs millions of ordinary Americans rely on. All this explains the appalled reaction of the U.S. bishops, who condemned the plan as “unconscionable” and “unacceptable.”
Whether the plan with its current inequities survives the Senate’s complicated reconciliation rules remains to be seen. But even without the aid of compliant lawmakers, major corporations and the richest individuals have ways, to borrow a phrase, of rigging the system. The degree to which they do so was most recently made clear with the November release of the Paradise Papers, a trove of more than 13 million legal and financial documents leaked to a German newspaper and shared with the International Consortium of Investigative Journalists. The documents, many originating from the offshore law firm Appleby, detail the elaborate mechanisms and complex financial networks corporations and wealthy families use to dodge taxes on a global scale. The “papers” show how entities and individuals stash billions in shell companies; shift the assets to havens like Bermuda, Cyprus, and the Isle of Man; and launder the money through a range of offshore investments. The hiding of such sums has obvious and quantifiable impacts. Worldwide, corporate tax avoidance has deprived governments of $699 billion in tax revenue in 2017. The United States alone loses out on $111 billion each year, according to Oxfam, while collectively the poorest countries are deprived of $100 billion annually. Meanwhile, it’s estimated that $8.7 trillion—11.5 percent of global gross domestic product—is held offshore by ultra-wealthy families, most of it unreported. All of this represents money that could be used for investments in health care, infrastructure, education, poverty relief, and many other programs.