The BEZOS Act

To End Starvation Wages and Kick Billionaires Off Welfare, Sanders Introduces ‘Stop BEZOS Act’

“It’s time to get Jeff Bezos, the Waltons, and the other billionaires who won’t pay a living wage off government welfare.”

September 05, 2018
by Jake Johnson Common Dreams

gollum

We wants it, we needs it. Must have the precious. They stole it from us. Sneaky little hobbitses. Wicked, tricksy, false!”

“We do not believe that taxpayers should have to expend huge sums of money subsidizing profitable corporations owned by some of the wealthiest people in this country. That’s what a rigged economy is about.”

Statement by Senator Bernie Sanders (Independent, Vermont) on the Stop BEZOS Act

Taking aim at Walmart, McDonald’s, Amazon, and other ultra-profitable corporations which pay workers so little they’re forced to rely on food stamps and other federal programs to survive, Sen. Bernie Sanders (I-Vt.) introduced legislation on Wednesday that would impose a 100 percent “corporate welfare tax” on large companies equal to the amount of public assistance their employees receive.

“Let us be very clear: We believe that the government has a moral responsibility to provide for the vulnerable—the children, the elderly, the sick, and the disabled,” Sanders said in a statement. “But we do not believe that taxpayers should have to expend huge sums of money subsidizing profitable corporations owned by some of the wealthiest people in this country. That’s what a rigged economy is about.”

Officially titled The Stop Bad Employers by Zeroing Out Subsidies (BEZOS) Act — an explicit dig at Amazon CEO Jeff Bezos, the richest man in the world — the goal of Sanders’ bill is to draw attention to the fact taxpayers are effectively subsidizing corporations’ starvation wages and pressure these companies to pay a living wage.

“If employers in this country simply paid workers a living wage, taxpayers would save about $150 billion a year on federal assistance programs, and millions of workers would live in dignity and security,” Sanders explained at a press conference unveiling the Stop Bezos Act on Wednesday.

Watch the full press conference:

 

Under the Stop Bezos Act, all companies with over 500 employees — including part-time workers and so-called independent contractors — would be hit with a tax if they don’t pay their workers enough to get by without federal assistance.

“This bill would establish a corporate welfare tax on large employers equal to the amount of federal benefits received by their low-wage workers,” a summary of Sanders’ bill notes. “For example, if a worker at a large employer receives $300 in food stamps, the employer would be taxed $300.”

Sanders unveiled the Stop Bezos Act just 24 hours after Amazon became America’s second trillion-dollar company. During his press conference on Wednesday, Sanders noted Bezos’ personal wealth grew by $2 billion on Tuesday alone.

While some openly questioned whether Sanders’ bill is the best way to address the issue of corporate malfeasance and worker inequality epitomized by Amazon, some argue the proposal “isn’t really about collecting funds for food stamps or Medicaid ― it’s about making a spectacle of the low pay and bad working conditions at profitable businesses.”

According to public data obtained by the New Food Economy, thousands of Amazon workers are paid such low wages, they are forced to rely on food stamps to provide for themselves and their families. And public data from U.S. Bureau of Labor Statistics, etc, show The High Public Cost of Low Wages: Low Wages Cost U.S. Taxpayers $152.8 Billion Each Year in Public Support for Working Families.

 

And here is an analysis of the Bezos Act from Naked Capitalism:

Why I Am Not Wildly Enthusiastic about Sanders’ Plan to Tax Amazon
By Lambert Strether of Corrente

Let me now turn to the problems with Sanders’ plan to have a plan. There are three defects in the idea as presented:

1) The framing reinforces the notion Federal taxes “pay for” Federal spending, so Sanders traps us in the austerity box;

2) The framing turns public assistance into a public-private partnership, since Amazon would now pay its “fair share” (my shudder quotes);

3) Even if you accept the “pay for” model, only cost of the services conveyed is covered, so the government would still be subsidizing Amazon for administrative costs.

Let’s look at each of these defects in turn.

Federal taxes do not pay for Federal spending, nor do taxpayers.

It is not true, as Sanders says, that “you pay for it.” You don’t. (I’ve helpfully underlined the places where Sanders reinforces this falsehood.) I won’t rehash the fact issue here, since most NC readers are familiar with the debate, but see “Taxes For Revenue Are Obsolete,” Beardsley Ruml, 1946; Ruml was Chair of the Federal Reserve.

Unfortunately for us all, the implications of Sanders’ framing are horrific, whether for the left, or liberals of good faith, if any.

Joe Firestone at NC on fiscal myths in campaign 2016:

The process of using fiscal myths to undermine Senator Sanders’ message has already begun with an attack by Laura Meckler of the Wall Street Journal on key elements of his program.

The attack was easily turned aside by progressive supporters, such as Gerald Friedman, who showed the fiscal proposals being criticized as “fiscally irresponsible” were sure to net save at least $5 Trillion, rather than cost $18 Trillion over a decade, as the WSJ was claiming, because they would replace current expensive programs, and deliver huge out of pocket savings for Americans. His views were particularly effective because the WSJ had relied on his study for the data informing its critique.

Apart from Friedman’s decisive critique of Meckler’s article, other notable instances of progressive pushback came quickly from James Kwak, Robert Reich, Joshua Holland, Matthew Yglesias, John T. Harvey, (who alone brought a Modern Money Theory (MMT) perspective to the debate), and John Geyman.

An important characteristic of the defenses of the Sanders agenda, with the exception of John Harvey’s, is their emphasis on the point that we can afford Bernie’s agenda because it pays for itself with increased tax revenues from various sources.

These defenses are within the neoliberal framework and reinforce that framework. They pay silent homage to the fiscal myth the Government can only get money to pay for programs by taxing or borrowing, and that this is important because the Federal Government, like a household, a State Government, and all private organizations, have Government Budget Constraints (GBCs).

Attacks on other proposed fiscal policies on the Senator’s agenda in the infrastructure, climate protection, and job creation areas are sure to intensify in the coming weeks and months, as these policy proposals get increasing exposure and scrutiny. Critics will say the likelihood is high policies in these areas will require substantial deficit spending, and increases in the national debt, and also that deficit reduction and deficit neutrality should be targeted as the first principle of responsible fiscal policy, outweighing all other considerations.

But this assumption belongs to a constellation of fiscal myths that are all false.

Nonetheless, as Campaign 2016 develops, faux fiscal responsibility deficit and debt memes, fueled by a chorus of think tanks where the Very Serious People (VSP) sit and talk only to one another, will take center stage in political debates.

At that point, mainstream critics in the media will use these myths to whip the Sanders proposals unmercifully as the ravings of a “pie in the sky,” “socialist,” who “knows nothing about public finance” and the “need for fiscal responsibility.”

 

As indeed they did. The “fiscal myth” taxes pay for Federal spending is already being used to attack Medicare For All. When Sanders asks and answers “You know who pays for those programs? You do,” he’s teaching an entire constituency a falsehood that actively works to undermine working class interests in universal concrete material benefits! Why on earth would Sanders do this?[2]

To the next points, which are shorter–

2) Public assistance should not be framed as a public-private partnership. Follow the money.

Under the Sanders plan — leaving the morality of “greed” out of it — Amazon “pays back” the government $300 (say) for the Food Stamps the government gave its employees, so they can survive on the miserably inadequate wages Amazon pays.

In other words, Amazon and the government have become partners in provisioning the working class such that its members can reproduce their labor power. Surely this means, in principle — and I know legislation would have to be introduced for this to happen —  Amazon could reduce its share of Social Security matching, and have the government make up the difference there?[3]

Why not? Suppose Amazon wants to start “reforming” Food Stamps, on the grounds that, as a partner, it should be getting value for the $300 it spent?

3) The Sanders plan is still a subsidy. Conveying government services to citizens has administrative costs. So — assuming for the moment Federal taxes do indeed “pay for” Federal services — the $300 in Food Stamps Amazon “reimburses” the government for should be marked up to reflect those costs. That seems like a careless, sloppy omission (unsurprising, considering the process through which the plan to have a plan was released).

* * *To cure these defects, Sanders — and I do hope some staffer is reading this — should do the following* * *:

1) Make sure the false idea Federal taxes “pay for” Federal spending is not enshrined in legislation, even in the preamble. Contact Stephanie Kelton if you don’t believe me;

2) At least, for pity’s sake, de-emphasize that false idea in campaign materials;

3) Frame “the greed tax” as openly punitive (removing the “pay for”/ reimbursement aspect entirely);

4) Make Bezos suffer more; I suggested triple damages; Yves thinks that’s the right number.

Of course, this leaves aside the whole question of whether the tax system can be used to achieve the desired effect; but that is a topic for another day.

Oh, and from the 30,000-foot level, the Sanders idea would apply to other ginormous malefactors, like Walmart. And Sanders is going after individual corporations, like Disney. I like that, too. But if the left is to become “the party of ideas,” as seems to be happening, those ideas need to be fully worked!

NOTES

[1] It’s worth noting that Sherrod Brown (D-OH), with whom Sanders has a legitimate beef (see also), had a similar concept, which he called the “Corporate Freeloader Fee.”

From Brown’s 77-page white paper, “Working Too Hard For Too Little: A Plan for Restoring the Value of Work in America” (PDF), pages 44-45:

 

Some forms of employee marginalization, such as wage theft, anti-unionizing efforts, and unpredictable schedules will be addressed by the improved labor standards described above. Raising the minimum wage to $15 an hour will help lift millions of American out of poverty, and requiring part-time workers to get the same access to retirement plans as full-time employees could increase savings for millions of workers.

But it is possible that through the denial of hours or other means, employers may maintain policies that keep their employees impoverished. In these instances, the companies are not investing in their employees and instead are relying on taxpayers to subsidize the cost of their workforces. Taxpayers should be reimbursed for subsidizing a company’s workforce through a fee, called the Corporate Freeloader Fee here.

The fee would be based on the percentage of staff earning wages less than 200 percent of the federal poverty rate for an individual person, or $23,760 for 2016. The fee would be assessed only on employers that have paid $100,000 in payroll taxes a day for 180 days in the last year,and it would be scaled based on the percentage of a company’s workers below the poverty threshold.

For example, a fee of 25 basis points of total payroll would be levied on employers with 25 percent or less of their workforce earning wages at the poverty level or lower. The fee would increase to 50 basis points for companies with between 25 percent and 50 percent of their workers earning less than poverty level wages.

The fee would be 75 basis points for employers with between 50 percent and 75 percent of employees earning less than poverty level wages and 100 basis points for more than 75 percent of employees and above. Companies could reduce their fees by 25 basis points if they provide healthcare benefits and make employer contributions to retirement. Conversely, companies that are already providing decent wages to their employees and are dedicated to staying in the U.S. should be rewarded.

To be unfair, I gotta say this strikes me as yet another liberal attempt at “problem-solving” through an insanely complex rejiggering of the tax code. Sanders’ plan-to-have-a-plan of moving $300 out of Jeff Bezos’ pocket back into the government’s is a lot simpler to understand and explain.

To be fair, Brown does attempt to address the fundamental issue — the power imbalance between workers and owners — with improved “labor standards.” To be even more fair, the words “monopoly” and “monopsony” don’t appear anywhere in Brown’s white paper.

Since Amazon isn’t profitable — except for AWS — why not just turn the marketplace into a public utility? Neither Brown nor Sanders want to go there, however.

[2] It may be that here we have a case of the old adage “science advances one funeral at a time.” Younger candidates like AOC are more receptive to ideas that reflect the real operations of the economy.

[3] Taxes do not have to pay for spending to make this problematic. Follow the logic to its conclusion, and you come to the idea Amazon shouldn’t pay any taxes at all.

Oh, wait

Further Reading:

Worse than Wal-Mart: Amazon’s sick brutality and secret history of ruthlessly intimidating workers

Socialism for the Rich, Capitalism for the Poor: An Interview With Noam Chomsky

Six Things We Can Learn About US Plutocracy By Looking At Jeff Bezos

Privatizing Profits and Socializing Losses

Amazon Close to Breaking Wal-Mart Record for Subsidies

gollum.jpg

 

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