There’s an iconic photo that shows Ronald Reagan and a bunch of his Republican cronies buckled over, laughing uproariously. Who knows what they found so funny — maybe President Reagan just burped or George H.W. Bush did an armpit fart. Whatever.
But some wag turned the photo into a legend with the caption: “And then we told them the wealth would trickle down!”
Could it be that this knee-slapper is finally wearing thin, that the public is sick and tired of the trickle-down scam?
To the surprise of many, the mild-mannered U.S. President Joe Biden is making a daring bid to overturn much of the mean-spirited conservative economic agenda that’s dominated America — and the world — since Reagan’s presidency in the 1980s.
“Trickle-down has never worked,” declared Biden in his address to Congress last week, as he rolled out a massive agenda that would drive a hole through the heart of Reaganomics and its small-government fetish (at least when it comes to government helping ordinary people).
Biden wants to spend $6 trillion on things that would significantly improve the lives of regular Americans — family benefits, paid medical leave, free preschool and community college, infrastructure and green new jobs, enhanced rights for workers.
And he wants to pay for it by raising taxes on corporations and other high-fliers last seen buckled over laughing at how massively they’ve swindled the American people.
Of course, Biden faces huge obstacles getting his plans through both houses of Congress; it’s quite possible he won’t succeed. Still, his willingness to directly challenge long-held dogma is invigorating — and likely to change the debate.
That could help Canada also break free of the suffocating effects of Reaganomics (or neoliberalism) with its agenda of austerity for the masses and tax breaks for those at the top.
Certainly, Biden’s endorsement of bigger government makes it easier for Justin Trudeau to proceed with his recently announced national child-care plan. Canada’s deficit hawks won’t have their usual clout now that our largest trading partner has stopped preaching austerity and small government.
Trudeau has shown some spine against the deficit hawks, but he has been timid about joining Biden’s campaign to tax the wealthy. (Trudeau’s new luxury tax is a nothing-burger compared to Biden’s proposed tax hike on capital gains held by the super-rich.)
Too bad. We could sure use the money to pay for needed programs. Besides, when nations co-operate, corporations have a hard time playing us off against each other in pushing for ever-lower taxes.
That’s why Canada should be backing Biden’s effort to clamp down on corporate tax havens, which deprive governments around the world of US$245 billion a year in desperately needed revenue, according to Tax Justice Network.
In a potentially game-changing move, Biden is trying to enlist major nations (through the Organization for Economic Co-operation and Development) to support a global minimum tax, which corporations would be required to pay on their worldwide income, regardless of whether it was reported in a tax haven.
Washington is proposing a minimum rate of 21 per cent. So if a U.S. corporation reports income in a country where the corporate tax rate is 5 per cent, Washington would impose an additional tax to bring that corporation’s tax rate up to 21 per cent. This would mean much higher taxes for corporate giants — Amazon, Facebook, Google, etc. — that make extensive use of tax havens.
International tax expert Gabriel Zucman says that if other countries follow the U.S. in policing their corporations this way “it’s the end of tax havens.”
Germany and France have pledged support for Biden’s corporate minimum tax — but not Canada.
Trudeau said he’s open to the idea, but declined to commit to it, insisting instead that Canada will always ensure its taxes are competitive with other nations. This kind of tax competition is exactly what Biden’s global minimum corporate tax is designed to avoid.
Over the years, Canada has far too often bowed to Washington, which typically lines up behind corporate interests.
How maddening that we’re showing a rare streak of independence when Washington is finally cracking down on corporate misconduct and actively pushing to rid the world of the scourge of tax havens.
Linda McQuaig is a journalist and author of The Sport & Prey of Capitalists: How the Rich are Stealing Canada’s Public Wealth. This column originally appeared in the Toronto Star.
Image: Meme Generator