During a Q&A session at a Wall Street Journal gathering of CEOs, National Economic Council director Gary Cohn got publicly embarrassed.
One of the key selling points of the Trump administration’s push for drastic changes to the tax code is that it would encourage corporations to invest in creating more jobs in the United States. However, when a Wall Street Journal (WSJ) associate editor asked for a show of hands of all the corporate executives who would increase investment if the tax plan was passed, only a couple of hands went up.
WSJ ASSOCIATE EDITOR JOHN BUSSEY: If the tax reform bill goes through, do you plan to increase investment, your company’s investment, capital investment? Just a show of hands, if tax reform goes through?
NATIONAL ECONOMIC COUNCIL DIRECTOR GARY COHN: Why aren’t the other hands up?
1. Tax-overhaul backers say corporate rate cut will encourage investment by businesses
2. During #wsjceocouncil interview with Gary Cohn, WSJ asks CEOs to raise hands if they'll boost investment if rates cut
3. Few CEOS raise hands
4. Cohn asks: "Why aren't the other hands up?" pic.twitter.com/5PI60NlW0A
— Tim Hanrahan (@TimJHanrahan) November 14, 2017
Cohn is the chief architect of the Republican tax plan, which would slash tax rates for corporations and the wealthy at the expense of 13.8 million working-class households, which would see a tax increase under the plan. Corporations would have their U.S. tax rate cut to just 20 percent under the proposal.
However, many multinational corporations like Apple and Pfizer already employ a number of dubious tax avoidance schemes to pay a single digit, zero percent, or even negative effective tax rate. As Institute for Policy Studies scholar Sarah Anderson wrote in the New York Times in August, American corporations have been able to keep money booked offshore for tax purposes, even though they have the ability to use those funds in the United States at any time.
In short, this means cutting the corporate tax rate is just an added perk that has no effect on job creation:
American multinationals hold $2.6 trillion in profits “offshore,” on which they would owe $750 billion in federal taxes if the money was repatriated. In most cases, these foreign profit stashes are merely an accounting fiction. Companies retain full access to these funds for use in the United States and could, if their executives so chose, use them to create jobs here.
Republicans don’t have 60 votes to pass the tax bill through the senate’s normal rules, so they’re counting on passing it under budget reconciliation rules, in which a bill can be passed with just 50 votes plus a tiebreaker from Vice President Mike Pence, if necessary. However, the Congressional Budget Office (CBO) estimated the plan would cost $1.7 trillion over a ten-year period, meaning it would be too expensive to pass under reconciliation rules.
On Tuesday, Senate Republicans introduced a version of the bill that would repeal the Affordable Care Act’s individual mandate as a means of raising $338 billion in revenue necessary to pass the tax bill under reconciliation rules. However, that move is likely to re-ignite the healthcare debate, as repealing the individual mandate would take health insurance from 13 million Americans, according to the CBO.
Carl Gibson is a politics contributor for Grit Post. His work has previously been published in The Guardian, The Washington Post, The Houston Chronicle, Al-Jazeera America, and NPR, among others. Follow him on Twitter @crgibs or send him an email at carl at gritpost dot com.