The Republican tax cut bill passed by the House and by the Senate Finance Committee is, as I’ve written elsewhere, especially generous toward corporations. The corporate tax rate will fall from 35 to 20 percent, and businesses are expected to save $1 trillion over the coming decade. Among the big winners in Minnesota are the corporate donors of Rep. Erik Paulsen (R), who helped develop the House version of the bill.
According to data from the Center for Responsive Politics, a nonpartisan watchdog group that tracks money in politics, Paulsen has raised more than $18 million over the past decade. All but two of his top 20 donors are corporations, including General Mills, Medtronic, Target (Paulsen’s former employer), and UnitedHealth Group.
The StarTribune has found that if the GOP’s tax plan goes through, “At least 34 of Minnesota’s 50 largest publicly traded corporations could enjoy lower tax rates than they did in 2016.” Republican lawmakers hope that the reduced tax on transfers of corporate cash from foreign banks will encourage companies to bring their profits back to America. Minnesota corporations like Medtronic, General Mills, and 3M－which hold a combined $9 billion in offshore accounts－could enjoy this discounted repatriation rate in addition to the reduction in their overall tax burden.
Paul Gutterman, a specialist in federal taxation at the University of Minnesota, said that the GOP’s tax cuts are “unprecedented, permanent [increases] to [corporate] incomes, some of them huge.” Paulsen and his Republican colleagues have consistently suggested that slashing the corporate tax rate would “trickle down” in the form of economic growth and higher wages for workers. Gutterman questioned this assumption. “The concept that everybody will pay workers more flies in the face of every economic model I know of,” he said.
During the presidency of George W. Bush, the corporate tax rate was reduced in a similar way. While businesses took billions in new tax breaks, wages and jobs remained stagnant. Corporate tax cuts instead benefited CEOs and high-income investors.
The tax bill now moves to the full Senate, where the bill’s passage is less certain. Republicans have a narrow 52-vote majority and one Republican senator, Ron Johnson (Wisc.), has already announced he won’t support the current bill. Another Republican, Maine’s Susan Collins, has said she has significant reservations about the tax cuts. This internal Republican dissent could mean that like the fight over healthcare earlier in the year, the GOP might again find itself in the embarrassing position of being unable to pass important legislation despite controlling the White House and both houses of Congress.
Featured image via YouTube.