In the March 10, 2008 Too Much newsletter, Editor Sam Pizzigati writes about their proposal in "Egalitarian Corporate Lawyers--Shared Economic Growth: Wouldn’t That Make More Sense?"
dedicated to educating the American public regarding the effects of the tax system on the economy and options for improvement.
A simple question: Where’s America’s cash? Certainly not with average Americans. If average Americans had cash in their wallets, they wouldn’t be maxing out home equity lines of credit to pay off monthly bills. They wouldn’t be losing homes, at record rates. And our consumer spending-dependent economy wouldn’t be sinking ever deeper into recession.
So who has the cash? News reports last week supplied one answer. Corporate CEOs are now sitting on the biggest cash hoard in modern business history. In February, the nation's top 500 companies were sitting on $600 billion in cash, triple the cash that sloshed away on S&P 500 balance sheets just ten years ago.
This enormous stash, if circulated back into the domestic economy, could stimulate the United States right out of recession. But top corporate execs aren’t investing in America. They’re shifting jobs overseas instead — and investing only in schemes, like buyouts of other companies and buybacks of their own corporate shares, that line their own pockets.
Not a pretty sight, and Matt Lykken, for one, has seen enough. A corporate tax attorney, Lykken has joined with two other corporate tax lawyers, Laura Hunt and Heléna Klumpp, to launch “Shared Economic Growth,” a campaign to overhaul the U.S. tax laws that encourage U.S. companies to offshore their operations.
To end the incentive for going offshore and “encourage companies to bring home the cash they have invested abroad,” Lykken and his colleagues want to let corporations deduct off their taxes any dividends they pay out. That would lead to bigger dividends, they posit, and these bigger payouts would put cash in the pockets of average Americans who own shares of stock.
But wouldn’t bigger dividends also generate windfalls for the rich? The Shared Economic Growth plan would stall these windfalls by upping tax rates on America’s wealthy. The plan would eliminate all preferential tax treatment of capital gains income and impose an additional 7½ percent tax on individual income over $500,000.
These two moves would over double the tax rate on a typical hedge fund manager’s $100 million annual income.
Lykken and his corporate tax attorney team are building a detailed case for their reform approach online. But their work’s real significance may be the light their proposal shines on the growing opposition — within corporate ranks — to America’s continuing concentration of income and wealth.
Over a hundred years ago, a high-powered corporate lawyer inspired a similar opposition. Disgusted by the gross inequality of his day, this corporate lawyer — Louis Brandeis — began battling for reforms to topple plutocracy in America. He would eventually gain a seat on the U.S. Supreme Court and help forge the political consensus that cut America’s rich, in the mid 20th century, down to democratic size.
The corporate tax lawyers behind Shared Economic Growth are reviving that Brandeis spirit. And that revival matters, more than the specifics of any reform proposals. If even corporate tax lawyers are decrying our top-heavy status quo, a new assault against concentrated wealth and privilege may finally be in the offing.
So who are these guys? For their bios on SharedEconomicGrowth.org:
graduated with honors from Harvard Law School in 1985 began his career with the Office of Chief Counsel, I.R.S., and for the last 17 years has worked as an international tax planner and tax department head living in the U.S. and abroad, working for both U.S. and foreign owned corporations. He has advised governments from Trinidad to newly post-communist Poland on the design of their tax systems, and has been a member of the core evaluation team for dozens of corporate investment decisions. He is intimately familiar with the negative effects of acquisitions of U.S. corporations by tax subsidized foreign rivals.
graduated from the University of Illinois College of Law at Champaign in 1991 and received her M.B.A. from the University of Miami in 1987. She has worked for U.S. based multinationals in domestic and international tax planning and audit defense for 14 years.
has advised dozens of U.S.- and foreign-owned companies on worldwide transactions and tax planning strategies. A graduate of Georgetown University Law Center, Ms. Klumpp is currently employed as tax counsel for a Fortune 300 corporation. She has written extensively on tax policy issues, having recently served as editor of Tax Notes magazine, the leading news source for tax professionals and policymakers. Before working for Tax Analysts, publisher of Tax Notes, Ms. Klumpp spent nearly eight years working in the Washington, D.C. office of a large, multinational law firm. As the mother of two young children, Ms. Klumpp is passionate about leaving a sound national fiscal legacy for the next generation of Americans and views corporate tax reform as an essential step in that direction.
Update: April 21, a visitor from house.gov (The U.S. House of Representatives) stayed over three minutes, having arrived from a google search on Lykken's name. The outclick was to the SharedEconomicGrowth.org site. There hasn't been any news coverage, although Tax Notes published a paper by Lykken and Hunt March 17 (not available except for subscribers.)