Joseph Stiglitz sits down with Bill Moyers to talk taxation for all, fair taxation for all, including cracking down on the mega tax-dodging corporations such as GE, Pfizer, and Merck. Stiglitz just published a White Paper on the subject which you can read here.
As he tells Moyers:
“I think we can use our tax system to create a better society, to be an expression of our true values.” Stiglitz says. “But if people don’t think that their tax system is fair, they’re not going to want to contribute. It’s going to be difficult to get them to pay. And, unfortunately, right now, our tax system is neither fair nor efficient.”
Here’s the start of the transcript:
BILL MOYERS: This week on Moyers & Company, Nobel laureate Joseph Stiglitz.
JOSEPH E. STIGLITZ: Our democracy is now probably better described as one dollar, one vote than one person, one vote. We have a tax system that reflects not the interest of the middle. We have a tax system that reflects the interest of the one percent.
BILL MOYERS: Welcome. Avoiding taxes has become a hallmark of America’s business icons; Apple, Google, GE, and many more of the Fortune 500. The nation’s largest corporations are sitting on more than $2 trillion in cash while revenue from corporate income taxes have plummeted from just below 40 percent in 1943 to just below 10 percent in 2012. Government and big business have colluded to create what’s tantamount to an “unlimited IRA” for corporations.
That’s not my term, although I wish I had thought of it, because it explains so much about what’s gone wrong in a country where some 20 million workers who would like a full-time job still can’t get one. Yet the upper one percent of the population takes home a staggering 22.5 percent of America’s income while their effective federal income tax rate has dropped.
No, the phrase was coined by Joseph Stiglitz, a man eminently worth quoting, a Nobel Prize winner and one of the world’s most influential economists.
Currently he’s president of the International Economic Association. Former chairman of the Council of Economic Advisors under President Bill Clinton, and the author of best-selling books that have shaped worldwide debates on globalization, income inequality, and the role of government in the financial marketplace. Now he’s written one of his shortest but most important works: this white paper, published by the Roosevelt Institute where Joseph Stiglitz is a senior fellow. It’s a mere 27 pages, but in clear and cogent prose, backed up by facts and figures, it lays out a plan that not only would reform our taxes but create jobs and strengthen the economy. I’ve asked him here to tell us about it. Welcome.
JOSEPH E. STIGLITZ: Nice to be here.
BILL MOYERS: You argue that elimination of corporate welfare, or at least its reduction, should be at the center of tax reform. Why?
JOSEPH E. STIGLITZ: Well, let me put it in a broader context. Our country needs, faces a lot of challenges. We, as you mentioned, 20 million Americans would like a full-time job and can’t get one. We have growing inequality. We have environmental problems that threaten the future of our planet. I think we can use our tax system to create a better society, to be an expression of our true values. But if people don’t think that their tax system is fair, they’re not going to want to contribute. It’s going to be difficult to get them to pay. And, unfortunately, right now, our tax system is neither fair nor efficient. Look at the tax rate paid by that one percent. It’s much lower than the tax rate paid by somebody whose income is lower who works hard for a living, as a percentage of their income.
You know, Warren Buffet put it very, you know, why should he pay a lower tax rate on his reported income than his secretary? And the interesting thing that he didn’t emphasize was most of his income is in the form of unrealized capital gains.
BILL MOYERS: Unrealized capital gains are not taxed as long as the owner keeps them, right, doesn’t get rid of them?
JOSEPH E. STIGLITZ: That’s right. And what’s even worse, if you’re a corporation and you even realize the capital gains but you’re abroad, you don’t bring the money back home, there’s still no taxes.
As long as they don’t bring the money back here, it accumulates, it grows and grows and grows, and they get wealthier. But it’s even worse than that. Because it means that they have an incentive to keep their money abroad.
And what does that mean? They have an incentive to create jobs abroad. And with our trade agreements, they can take the goods that are produced abroad with this tax-free money, bring it back in the United States, basically making it unfair competition with the goods produced by Americans.
BILL MOYERS: Yeah. There are several startling statements in your report. This is one of them: “our current tax system encourages multinationals to invest abroad.” And create jobs abroad, as you just said. And yet, these are people who defend their practices by saying, we are the job creators, we’re the job producers. And yet, you say they have an incentive to send jobs abroad.
JOSEPH E. STIGLITZ: The whole discussion of who are the job creators, I think, has been misplaced. You know, what really creates jobs is demand–
BILL MOYERS: I spend my money to buy things.
JOSEPH E. STIGLITZ: Exactly. Americans of all income groups are entrepreneurial. You got people across our income distribution who, when there’s a demand, respond to that demand. But if there’s no demand, there won’t be jobs. Now, the problem is that the people in the one percent have so much money that they can’t spend it all. The people at the bottom are spending all of their income and hardly getting by. In fact, a very large fraction of those in the bottom 80 percent are spending more than their income. And it’s part of the instability of our economy. So, the point is this inequality contribute, to which our tax system contributes actually weakens our demand.
And that’s one of the main messages of my report, which is if we had a more progressive tax system, we could get a more efficient economy. Because there would be more jobs being created. continues