Aligning the interests of investors and workers: saving American jobs

[welshTerrier2]

Outside of a small minority of "socialist types", most folks don't get too energized about digging down into the nuts and bolts of globalization and its impact on workers, communities and the very fabric of American society. The big marquis ideas include calls from the left to do away with NAFTA and the WTO. Kucinich has made this a plank in his presidential campaign and rightfully so. But even eliminating these evil institutions does not go far enough. Even with bi-lateral trade negotiations, given the current tax laws, workers will always come out on the short end of the stick.

And make no mistake about it, that short end does more than injure American workers. Whole industries have disappeared. Whole communities have disappeared.

The Democrats' plan, a good starting point to be sure, includes repealing special tax incentives that actually reward companies that move jobs or whole plants overseas. How crazy is that? In 2004, Kerry made calling for repeal of these incentives part of his campaign. It was a good idea; it still hasn't happened.

And it won't happen, until one of the fundamental paradigms of the US tax law is changed. Not the most exciting topic, I suppose. Unfortunately, too many of us ignore it "until they come for our job." We are being picked off one at a time and most of us can't be bothered to align ourselves, union or otherwise, with our fellow workers. Here's a hint: "I've got mine" is a mighty thin insurance policy. Mighty thin.

When issues about "punishing" corporations who ship jobs overseas are raised, the "company line", pun very intended, is to cry out that such punishment will make American companies unable to compete in the global marketplace. Well, fine. I have a little plan I hope gets a little traction here on DU and beyond.

Here's my "how to address all this outsourcing" program. Sorry it's a little dull; you'll thank me if it saves your job someday.

Let's start with the most obvious: corporations are in business to make money. We've come to a time in this country where being a corporate man is valued ahead of being a patriot. CEO's are not given power to "do right by America." If it's cheaper to build it using Chinese labor, see you later USA. When you think back to the spirit of Rosy the Riveter, we've come a long, long way baby. The greatest generation has been replaced by the MBA generation. They'll write books about us too when we're in our eighties; I doubt we'll fare as well. Anyway, let's just accept the premise that corporations are driven almost exclusively, if not exclusively, by the profit motive.

My plan in response to this? Let's let business do their thing. If they want to move overseas to compete, fine. Whatever. Do what you have to do. But whom do those CEO's answer to? They answer to their Boards of Directors and to the largest stockholders. And what do the stockholders demand? Profits. They have no social consciences either. Money money money money money. If US workers lose their jobs, if whole industries are wiped out, if whole towns or regions of the country are wiped out, no problemo as long as the rate of return is high. So, sitting behind all that corporate greed, are real people trying to make a buck. Job security and high paying jobs are not their concern. Unless we change the tax code.

Some argue we should raise the corporate tax rates on companies that export jobs. I say, we should raise the tax rates on those pushing the companies to export jobs. See the difference? Instead of giving significant tax discounts via lower capital gains rates to investors, let's pro rata eliminate some of their special discount based on a comparison of domestic salaries the company pays versus foreign salaries. So, in its simplest form, if a company has 30% of its payroll overseas, then only 70% of capital gains made on the sale of its stock would get the lower capital gains rates. Now, what do you think those stockholders will be telling the management when they are thinking about shipping those jobs overseas. Instead of paying taxes on their gains at 15%, the rate might be more than 30%. With big investors, that adds up in a hurry. It sort of "levels the playing field" between American workers and cheaper foreign workers by not subsidizing profits that result from the exporting of American jobs.

Companies would be free to pursue whatever they needed to do to be competitive. But the forces behind them, the investor forces whispering in their ears, would be given at least a wee little incentive to align themselves with American workers. It's time we recognized that the tax code can be a very real incentive to encourage the kinds of behavior we want to see. Except this time, we'd be putting Americans and their jobs ahead of big international companies and their shareholders. Instead of having American labor held hostage in a "race to the bottom", let's start making the tax code work for us.