Wednesday, June 20, 2018
Business

Hey, do corporations need any more tax cuts?

Interesting headline came across the wire the other day.

Turns out, America's CEOs are doing awfully well for themselves. The head of a typical public company made $9.6 million in 2011, which was a 6 percent increase from 2010.

Good for them, I say. They climbed the ranks. They put in the hours. They took the risks. There is absolutely nothing wrong with the biggest bang going to the biggest guns.

Here's where I do have an issue:

Our governor and Legislature still seem to think it's a good idea to push corporate tax breaks for companies run by these superrich CEO types.

The theory is that by cutting corporate taxes, these businesses will turn around and reinvest those savings in our communities and help create new jobs.

So when, exactly, does that start to happen?

Companies in the Standard & Poor's 500 stock index saw profits rise 16 percent last year, according to an Associated Press report. So the big companies are making big money, their CEOs are skimming the newest yacht brochures, and Florida politicians are looking for ways to cut their corporate taxes.

Meanwhile, unemployment still kinda stinks.

This is where trickle down economics meets reality. Because for that theory to work, you have to actually trust that corporations are going to use these tax breaks to grow their workforce instead of their bank accounts.

And I'm not talking about tax breaks to lure companies to town. I'm talking about tax breaks Florida recently handed to telecommunications giants. Or tax breaks for private plane repairs. Tax breaks that decrease state revenues, but do not lead to actual jobs.

"What we're doing in Florida is the opposite of what we should be doing,'' said Alan Stonecipher, a research analyst for the liberal-leaning Florida Center for Fiscal and Economic Policy. "We are starving an already lean set of consumers.

"These tax cuts benefit corporations, but they lead to budget cuts that ultimately mean there is less and less money circulating in the economy.''

I admit my economic expertise is limited to playing Monopoly with my kids. And when I ran this by University of South Florida tax professor Ryan Huston, he suggested I might be mixing and matching concepts that don't necessarily fit.

So feel free to disagree or dismiss as much of this as you wish.

But when I read how CEO salaries are growing ahead of the rate of inflation while pay for U.S. workers is lagging far behind inflation numbers, I get skeptical.

It makes me recall the recent Florida legislative session when an amendment for corporate tax breaks was tacked on to an innocuous bill at the last minute.

It makes me wonder about AT&T outspending every other company in the state with $1.68 million in lobbying fees and then seeing legislation that slashes tax bills for telecommunications companies anywhere from $35 million to $300 million a year.

(When you look at it that way, AT&T's CEO probably deserved his $18.7 million income in 2011.)

It makes me wonder about Bank of America announcing in September that it was cutting 30,000 jobs, and then increasing the salary of its CEO from $1.3 million to $7.5 million.

"A lot of the arguments to justify this is just BS,'' said Stonecipher.

I don't know, maybe I am comparing apples and oranges.

Maybe it's wrong to look at the nest egg of cash reserves the biggest American corporations are sitting on ($1.24 trillion at the end of 2011, according to Moody's Investors Service) and wonder why they aren't hiring more workers.

Or to wonder why Florida politicians don't tie their corporate tax breaks into incentives that would ensure the savings are being reinvested in the state.

Or to be cynical about the motives of our governor and Legislature when they continue to put more money into the hands of their wealthy benefactors.

In the end, maybe one concept has nothing to do with the other.

But wouldn't it be nice if there was actual evidence to convince us otherwise?

John Romano can be reached at [email protected]

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