Biden's Corporate Tax Is Madness! | Squawk Box
What are we trying to fix? The economy is on fire. Leave it alone! People living in cities like New York, Los Angeles, to San Francisco, if Biden's plan went through, they would be the highest taxed individuals on Earth. Is that American? Nah, I don't think so.
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If you're going to tax corporations—and I would argue, I don’t know, I'm not sure— I think you ought to tax individuals. You know, corporations, you want them to do as well as they possibly can in your country to provide jobs and generate taxes and everything that people pay. But let's say you assume you are going to tax corporations. What's wrong with this? What’s wrong with doing it this way?
Well, first of all, let me be the skeptic for a moment and say that looking back historically, G20 and G7 meetings are essentially cocktail parties. Nothing wrong with that, a chance for the leaders to get together, hold hands, kumbaya, and let's tax everybody 15%. The chance that this happens, I would argue, is practically zero. Here’s why: about two-thirds, or at least half, of these various constituents who go to these meetings are facing re-election very shortly.
Number two is just because they say they want to do it at a cocktail party, they have to go back to their geographies and pass it in their own governments, and that in itself is going to be a huge challenge. Just take Ireland, for example. I happen to be an Irish citizen. I'm pretty familiar with Dublin and Malahide, the suburbs around there. Go in and have a pint of Guinness with any Irish citizen about the idea that Janet Yellen or the US or the Europeans or the British can tell them what to do.
I’d love to repeat what they say, Joe, but I unfortunately can't. I’ll tell you the chance that happens in Ireland: zero. The Irish understand the potential of nation-building, and corporate taxation is part of the weaponry, the competitiveness of it. That's how you're competitive.
You can do other things to raise taxes in all countries, including the U.S., which does not want to put a VAT tax in place, but all of the rest of these European countries are trying to go after big tech this way because they have no tech sector; they regulated it out of existence a long time ago. The only way they can get any tax revenue is to litigate, sue, and join in efforts like these, which makes no sense. This is going nowhere, and that is why the market doesn’t care. The competitiveness of nations will remain, and those that provide a better environment for corporations will get the jobs, like Ireland, like Hungary, and like others who are saying, “We don’t care what you think; let’s compete.”
John, do you think it's a good idea to have both of these things: to have this global minimum and to raise taxes in this country back to 28 percent on corporations?
Let’s deal with the 15, which is the agreement globally. By the way, we’re down from 40. It’s a 40% drop in taxes from 2017. Corporate taxes have been basically dropping for the last 70 years, as well as individual tax rates. But let me say this: I think this global plan by President Biden is brilliant, and Secretary Yellen is brilliant. No more hiding the ball, no more ducking.
When I go to Orlando, Florida, I pay taxes when I go there on whatever I buy. When I go to this morning to Utah, I'm paying taxes when I go there. You know, I'm happy to support where I'm at. By the way, my friend Kevin must be the most optimistic pessimist I know, or the pessimistic optimist I know. I mean, he's sitting with this green background, but you can't pay for that green background, environmental sustainability, unless somebody actually invests in R&D.
Every company, the brain, every growth company invests in their product and their home court. Even the Business Roundtable, Joe, said that we need to put the stakeholder above the mere shareholder. Those two things are connected. The Business Roundtable is agreeing in their principles with what President Biden is doing.
I had dinner with the Secretary of Treasury last week. I thought this is genius, and it shows American leadership again. By the way, America has not been respected like this on the global stage for a long time. Only America could do this; only America would do this. It is good for everybody. The more hiding the ball, it provides reinvestment, and it will happen, Kevin. It will happen. I don’t want to say what I know, but I have very good reason to believe this will happen on merit.
And I don't think people are talking—what people are against this is the President Clinton’s great quote: “It’s hard to get somebody to agree to the truth when the lie is paying their paycheck.”
Okay, so if you are a place that's hiding the ball, you're not for this. But I love this because this says, “Stop the games, knock it off, and reinvest in your home court.” A reasonable, by the way, a reasonable tax rate—I don’t want to remind everybody, the tax rate was close to 100% on the individual—my dad back after World War II with a Republican president. So we are whining about very, very nice spilled milk here. This is good for all.
Right, you must have a lot to say now, Kevin, after that.
Well, frankly, let’s talk about tax rates in the U.S. because my good friend John just brought that up—a reasonable tax rate. Right now, the U.S. sits exactly in the middle of the G20 in corporate taxation. If Biden's proposals were put in place, it would go from the middle of the pack to the very highest tax jurisdiction of the G20. Now I don’t see how that's good for business. I don’t think that’s the list you want to be on the top of.
And frankly, people living in cities like New York, where you are, Joe, and Boston and California and Los Angeles and San Francisco, if Biden's plan went through, they would be the highest taxed individuals on Earth. Is that American? Nah, I don’t think so. I don't think this is going to happen because we know the reversions would start immediately.
Where would they go? To Hungary and to Ireland. All these companies would follow the path of least resistance for their shareholders, just like they did a couple of decades ago when we were over-taxing them. Let’s not make the same mistake again.
What are we trying to fix? The economy is on fire. Leave it alone! Don’t touch it! Let it recover on its own. It doesn’t need any more government, and it certainly, at this point, does not need more taxes.
Let’s wait. I want to congratulate the Biden administration, by the way, on the great job they did on vaccination rollout. And also, if they get through this skinny infrastructure deal, those are good for the country. But this idea to build your mandate around taxing everybody in the world and making your own country the top tax jurisdiction on Earth is a bad idea. Not good for America, not good for jobs.
And by the way, I can't hire anybody right now because I'm competing with the government till the end of September. It’s extremely frustrating. The people that I’m paying are also getting paid by the government. We got to stop doing this to ourselves. This is absolutely crazy!
Yeah, John, final thoughts. And you know that 90 percent rate you're talking about out there? No one paid that. You know that. There were so many ducks in any deductions; rich people were paying less than they pay now back then.
Now, what is a fair rate for people? John, is 50% okay or you want to go above that? If you work through June, well into July, to pay off what you owe the government, isn’t that enough? Or should there still be more?
Well, I don’t want us to be a Nordic country, where the rate's about 50 percent. That's not where we should be. There's a lot of room. With all due respect, Joe, you just said you're contradicting yourself. There are write-offs and all carve-outs.
Look, I'm highly compensated, and I have very interesting ways—legal ways—to minimize my tax burden while by paying what I do, what I deserve. Let me go back, though, to the substance of this. Kevin just said something ridiculous, right? We’re 13th in the world in infrastructure. We're the number one economy in the world, as he just said, but we're 13th on infrastructure.
So there are times where you have to invest more. By the way, I do agree with Kevin. There are cities like New York that probably are over-taxed in the state. But on a national level, we are the special forces team here, and we are—it’s a matter of urgency! The roads are falling apart! My wheels are coming apart in potholes in my city.
We have got to ride this economy on a road that can actually hold it. And I don’t mean just physical roads; I mean people roads, infrastructure, human capital. You’ve got to reinvest in your product. You want to be Netflix, in this example, not Blockbuster, which has been out of business because it focused on the short term versus the long term.
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