inflation
Bowman, Sanders Propose 95% Tax on Corporations Exploiting Inflation to Jack Up Prices
"Enough is enough," said Sen. Bernie Sanders. "We cannot continue to allow large corporations to make obscene profits by price gouging Americans in virtually every sector of our economy."
Rep. Jamaal Bowman and Sen. Bernie Sanders on Friday led a group of progressive lawmakers in announcing legislation that would penalize large corporations with a 95% windfall profits tax for using elevated inflation as a pretext to hike prices and pad their bottom lines.
The
Ending Corporate Greed Act would "establish a 95% windfall profits tax on a company's profits that are in excess of their average profit level from 2015-2019, adjusted for inflation," according to a summary of the measure.
The bill would keep intact the 21% statutory corporate tax rate for profits equal to or lower than they were prior to the coronavirus pandemic. The 95% tax on windfall profits would be limited to companies with $500 million or more in annual revenue and would be temporary, running only through 2026.
Bowman (D-N.Y.), whose primary contest against AIPAC-backed George Latimer is in on Tuesday, introduced the bill in the House on Friday alongside several original cosponsors. Sanders and Sen. Ed Markey (D-Mass.) are expected to introduce companion legislation in the Senate in the near future.
"The American people are sick and tired of being ripped off by large corporations that continue to make record-breaking profits by charging outrageously high prices for gas, rent, food, and prescription drugs, " Sanders said in a statement.
"Enough is enough," he continued. "We cannot continue to allow large corporations to make obscene profits by price gouging Americans in virtually every sector of our economy. If corporate CEOs and their masters on Wall Street will not end their greed, we must end it for them. It is time for Congress to enact a windfall profits tax."
The bill's authors estimate that had the proposed 95% windfall tax been in place last year—when U.S. corporate profits surged to a record high—the federal government would have raised $300 billion in additional revenue from 10 large companies alone.
"Since the pandemic, corporations have remained incredibly selfish in their business practices, squeezing their consumers who rely on them for essential goods and services, including gas, food, prescription drugs, banking, and more," Bowman said Friday. "Congress must do its part to check corporate greed before it completely robs people in America of their ability to live a life in pursuit of liberty, justice, and happiness."
2023 Profits Above Pre-Pandemic Average:
⬆️444%: Amazon
⬆️325%: Marathon Petroleum
⬆️289%: Chevron
⬆️202%: Berkshire Hathaway
⬆️195%: Google
⬆️193%: Centene
⬆️190%: Microsoft
⬆️165%: Exxon Mobil
⬆️165%: Facebook
⬆️111%: Lowe's
⬆️108%: UnitedHealth
We need a windfall profits tax. pic.twitter.com/E4ocyfzdRT
— Warren Gunnels (@GunnelsWarren) June 21, 2024
Companies haven't been shy about using elevated prices across the U.S. economy as a justification for hiking prices on their products.
As Lindsay Owens, executive director of the Groundwork Collaborative, noted in a New York Timesop-ed in 2022: "Executives on their earnings calls crowed to investors about their blockbuster quarterly profits. One credited his company’s 'successful pricing strategies.' Another patted his team on the back for a 'marvelous job in driving price.' These executives weren't just passing along their rising costs; they were going for more. Or as one CFO put it, they were 'not leaving any pricing on the table.'"
A recent Groundwork analysis estimated that between April and September 2023, corporate profits fueled more than half of U.S. inflation. Economists with the International Monetary Fund came to a similar conclusion last year about price increases in Europe, blaming "rising corporate profits" for "almost half the increase in Europe's inflation over the past two years."
The new bill's sponsors pointed to examples of major corporations across a range of sectors reaping massive windfall profits last year amid high inflation, including Amazon, which reported $37.6 billion in 2023 profits—a staggering 444% increase compared to the company's average profit between 2015 and 2019.
Amazon, a notorious tax avoider, would have paid an estimated $19.1 billion in windfall taxes if the Ending Corporate Greed Act was in place last year.
"Corporate greed and unconscionable price gouging have resulted in Americans paying more for basic necessities such as gas and groceries," Markey said Friday. "The Ending Corporate Greed Act penalizes large corporations raking in record profits while everyday Americans and workers pay the price."
Analysis Shows Embracing Bold Renter Protections Can Help Democrats Win in 2024
"Tenant protections aren't just good policies—they're good politics," said one housing justice campaigner.
An analysis released Tuesday bolsters an argument that progressive lawmakers and organizers have been making with growing urgency in the lead-up to the critical November elections: Housing should be at the top of the Democratic Party's—and President Joe Biden's—agenda.
The research brief, authored by Russell Weaver of the Cornell University School of Industrial and Labor Relations (ILR) Buffalo Co-Lab, shows that tenants are a "large, untapped political base" that can be mobilized by candidates who offer bold solutions to the housing crisis and support the rights of renters against the predatory landlords squeezing them for profit.
While homeowners typically turn out to vote at a far higher rate than tenants, Weaver noted, the "owner-renter turnout gap is nearly cut in half when candidates run on renter-friendly platforms." Renters in New York state (NYS)—the focus of the new analysis—are more likely than homeowners to be registered as Democrats or members of the Working Families Party.
Analyzing the results of New York's statewide general election in 2022, Weaver found that NYS tenants "might have been relatively motivated to turn out for candidates who were vocal supporters or co-sponsors of the 2022 state-level Good Cause Eviction bill, which protects renters against rent hikes and evictions."
"In NYS Senate races that did not feature such a candidate, the average turnout rate among likely renters was roughly 29% (after adjusting for race-ethnicity and political party)," Weaver wrote. "In races that included Good Cause proponents, however, average renter turnout was more than five percentage points higher, at 34.1%—a statistically significant difference."
Weaver said in a statement that his analysis underscores that "candidates who campaign on housing affordability and tenant protections have the potential to significantly boost renter turnout, which could be decisive in tightly contested races."
"An organized tenant voting bloc could be the key to jump-starting a statewide housing policy agenda that works for all New Yorkers," said Weaver.
The findings could also have implications for national races as rent remains high across the country, leaving roughly half of U.S. tenants unable to afford their monthly payments as corporate landlords and billionaire investors gobble up rental properties and drive up costs. The Federal Reserve is also making the crisis worse by keeping interest rates elevated.
"This brief tells us what we already know: Renters are a powerful voting bloc that will determine the 2024 election," Katie Goldstein, a housing justice organizer at the Center for Popular Democracy (CPD), said of Weaver's analysis. "We can't leave these votes on the table."
"Tenant champions who run on these issues will be rewarded at the ballot box—and politicians who fail to do so will be voted out of office."
CPD, Right to the City Action, and HIT Strategies released survey data earlier this month showing that 87% of U.S. voters believe the "cost of rent and housing is a major or big problem in their state" and that 70% said they are "more likely to vote for someone who supports rent stabilization policies."
The new research brief and polling data strengthen the case for making housing a top priority for an incumbent president and Democratic lawmakers hoping to defeat their Republican opponents in November.
"Tenant protections aren't just good policies—they're good politics," said Esteban Girón, member of the Tenants PAC Board. "Candidates have the opportunity to win big by committing to keep rents affordable and protect tenants from displacement."
At a gathering in Los Angeles in early April, Sen. Bernie Sanders (I-Vt.) joined Reps. Pramila Jayapal (D-Wash.), Ro Khanna (D-Calif.) and other lawmakers at the national, state, and local levels in imploring Democrats to elevate bold housing policies and tenant protections such as federal rent control to the top of the party's agenda.
"This is the richest country on Earth. We're not a poor country," Sanders said at the event. "Can we build affordable housing that we need? Can we protect? And the answer is of course we can. But it will require a massive grassroots effort to transform our political system to do that."
Politicoreported earlier this year that Biden has privately expressed "increasing concern" that housing costs are putting his reelection hopes in jeopardy.
"The White House is now pushing a range of bulked-up tax credits to incentivize existing homeowners to sell their starter homes, as well as expand rental assistance and extend help for lower-income buyers with their down payments," the outlet noted. "Yet all those ideas require legislation. And while the White House has publicly argued the crisis affects red states just as much as blue states, aides privately acknowledge any movement is a long shot in an election year. Indeed, Republicans have been quick to pan Biden's housing push."
Presumptive Republican nominee Donald Trump, meanwhile, has not released a housing agenda as he vies for another four years in the White House. During his first term as president, Trump repeatedly pursued steep cuts to federal housing programs and assailed affordable housing initiatives.
Brahvan Ranga, political director of For the Many, said Tuesday that it is "critical we elect legislators who will enact policies that expand tenants' rights, create and maintain affordable green social housing, and affirm housing as a guaranteed right."
"The housing crisis is front of mind for tenants as they head to the polls—both in Democratic primaries and general elections. As housing costs continue to rise and working families struggle to stay in their homes, corporate real estate and greedy landlords are raking in record profits," said Ranga. "Tenant champions who run on these issues will be rewarded at the ballot box—and politicians who fail to do so will be voted out of office."
Biden Should Be Clear: Corporations Are to Blame for High Prices
Biden has not condemned specific corporations publicly, or threatened them with specific actions unless they lower their prices.
I’ve analyzed every poll and survey over the last two months, and they all tell the same basic story:
Voters’ top issue is high prices and the cost of living—not jobs, not abortion, not immigration, not U.S. President Joe Biden’s or former President Donald Trump’s age, not even the survival of democracy.
Voters still don’t believe Biden will get prices down, but they believe Trump will. A significant number appear willing to vote for Trump and risk the future of democracy because they believe he will do better job lowering prices.
Consumers are getting shafted, as corporations tell Wall Street they expect to be able to keep their prices and profits in the stratosphere.
Which is why Biden’s approval rating on the economy is deeply underwater while perceptions of Trump’s handling of the economy when he was president (marked by low inflation but huge job losses from Covid-19) are positive.
What should Biden do?
Put blame for high prices squarely where it belongs: on big corporations with monopoly power to keep prices high.
And take those corporations on: Condemn them for price gouging. Threaten them with antitrust lawsuits, price-gouging lawsuits, even price controls. Criticize them for making huge profits and giving their top executives record pay while shafting consumers.
And name names: PepsiCo, Tyson's, Kroger and Albertsons, Exxon-Mobil, and others.
To be sure, the Biden administration has brought down the prices of prescription drugs like insulin and inhalers, reduced bank overdraft and credit card fees, and cracked down on “junk fees” levied by airlines, concert promoters, and more.
Its Department of Justice has launched a lawsuit to combat price-fixing in the meat industry. And the FTC is suing to block the Kroger/Albertsons grocery mega-merger that would send grocery bills even higher.
“We’re taking on corporate greed to bring down the price of gas, food, and rent, eliminating junk fees,” Biden told a crowd of 1,000 supporters in Philadelphia recently.
But Biden has not berated hugely profitable corporations for keeping their prices and profit margins sky high—unlike Sens. Bob Casey (D-Penn.) and Sherrod Brown (D-Ohio), who have made corporate price hikes central to their campaigns and are outrunning Biden in polls. Biden has not condemned specific corporations publicly, or threatened them with specific actions unless they lower their prices.
Brown, who represents a state that Trump won handily in 2020, has cut several web ads proclaiming he is “cracking down on the companies that rip off Ohio.”
Casey released a campaign ad showing corporate executives in suits sneaking into a grocery store under cover of night and switching out cereal boxes for smaller replacements. He has introduced a bill that would crack down on “shrinkflation”—a term for companies’ reducing the size of their goods but not cutting prices (Biden praised that legislation during his State of the Union address).
Senate Democrats in tight races, like Tammy Baldwin of Wisconsin and Jacky Rosen of Nevada, are making similar pitches.
Why isn’t Biden?
Partly, I think, because he’s uncomfortable attacking corporations directly.
It’s also because some economists close to his White House (such as Larry Summers) disagree that a major driver of inflation is corporations’ raising prices to juice profits. (Three years ago, Larry and I publicly debated a wealth tax on hugely profitable corporations. I was in favor; he against.)
But the fact is, corporate profits have surged to record levels. Shares are trading at record levels. Corporations are buying back their stock at record levels. CEO pay is at record levels. Corporate concentration—monopoly power—is higher than ever.
Concentration has increased in over 75% of U.S. industries since the late 1990s.
Consumers are getting shafted, as corporations tell Wall Street they expect to be able to keep their prices and profits in the stratosphere.
Is It Inflation? Or Is It Greedflation? | Robert Reichwww.youtube.com
Most voters agree that big corporations are largely responsible for inflation. Nearly 6 in 10 say corporations’ being “greedy” is a major cause of inflation, including a majority of independent voters, according to a poll by Navigator Research.
The Biden campaign’s internal polling has found similar results.
With less than five months to go—and the cost of living being the No. 1 issue on voters’ minds—Biden should let ‘er rip.