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How Trump’s Tax Cuts Fueled Greedflation
Higher corporate taxes are both crucial for accountability and for ensuring that there’s far less incentive for executives to squeeze as much as they can from their customers.
May 16, 2024
Next year, when key provisions of President Trump’s 2017 tax breaks to the wealthy and corporations expire, we have an opportunity to get our money back.
I’m not just talking about all the foregone tax revenue we’ve lost because the rich have paid so little since 2017—though we should get that back, too. I’m talking about the money families have lost to corporate price gouging.
Let me explain.
In 2017, Republicans slashed the corporate tax rate from 35% to 21%, giving massive corporations their biggest tax windfall since Ronald Reagan was president. A few years later, as Americans emerged from a global pandemic, these same corporations drove up prices for families.
Congress raising the corporate tax rate in 2025 is an opportunity to recoup some of the truly obscene profits corporate America raked in during this period of economic upheaval for American families.
While inflation hamstrung workers and families, it didn’t make a dent in corporate profits. In fact, as many CEOs boasted themselves, it’s been a boon. Companies simply passed rising costs along to consumers—and then some, bringing in record profits as a result.
All told, corporate profit margins skyrocketed to 70 year-highs. And by the end of 2023, when Americans were beyond fed up, after-tax corporate profits hit an all-time record high of $2.8 trillion. My organization, Groundwork Collaborative, recently found that corporate profits drove over 50% of inflation in the second and third quarters of last year.
But why would a change in the corporate tax rate unleash the kind of rampant corporate profiteering we saw in the aftermath of the pandemic? Simple: It’s a lot more fun to gouge customers when you get to keep more of what you pull in.
Look at Procter & Gamble, which has raised the price of everything from toothpaste to diapers. Last year, the company pulled in more than $39 billion in profit.
If they had to pay the 35% statutory tax rate, they would have sent nearly $14 billion to Uncle Sam. Instead, they paid a 21% rate and, using loopholes, got to keep an extra $10 billion—which helped with their combined $16.4 billion worth of dividends and stock buybacks for shareholders.
Corporations did well from Trump’s corporate tax cuts, with executives getting big raises and shareholders receiving big buybacks. But the real bonus came when inflation hit. Corporations used the cover of supply chain issues and broader inflation to hike prices more than their higher input costs justified—and they didn’t have to worry about their tax bill.
Our tax code is exacerbating some of the worst corporate excesses, effectively “subsidizing corporate price gouging,” as Sen. Elizabeth Warren (D-Mass.) described it recently. But it’s not only that low tax rates incentivize companies to overcharge. Rock-bottom tax rates also make collusion more profitable, as we saw with Pioneer Oil.
Recently, the Federal Trade Commission barred former Pioneer Oil CEO Scott Sheffield from joining the board of ExxonMobil following their merger, because Sheffield allegedly colluded with OPEC to raise oil prices. As families struggled with higher energy costs, the oil and gas industry banded together to keep prices high, which according to one analyst accounted for 27% of inflation in 2021.
When the reward is higher with lower corporate taxes, executives like Sheffield are more willing to take the risk. Higher corporate taxes are both crucial for accountability and for ensuring that there’s far less incentive for executives to squeeze as much as they can from their customers.
Wall Street tycoons and CEOs didn’t take the heat of inflation—they fanned its flames and families got burned. It’s no wonder people overwhelmingly favor a tax code that’s no longer rigged for corporations, especially as they struggle with high prices.
Congress raising the corporate tax rate in 2025 is an opportunity to recoup some of the truly obscene profits corporate America raked in during this period of economic upheaval for American families. It’s time Americans got their money back.
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'Jail Time Should Seriously Be Considered,' Pocan Says of Big Oil Price Fixing
"I would recommend 'Orange Is the New Black,'" said the Wisconsin Democrat. "We're feeling it at the pumps and clearly this kind of behavior, we know, isn't isolated."
May 15, 2024
As Federal Trade Commission Chair Lina Khan appeared before a U.S. House of Representatives subcommittee on Wednesday, Congressman Mark Pocan highlighted recent FTC action against fossil fuel industry price fixing and urged criminal consequences.
"I just did a little napkin math," Pocan (D-Wis.) said. If collusion led to a $0.40-0.60 increase in the price for a gallon of gas for a vehicle, "for the average person filling their tank, that's $8 or $10 a week," he explained. "That's $500 a year of added cost."
If half of the residents in Pocan's congressional district have a car, "that's $175 million a year," he said. If that figure is applied across all 435 districts, it translates to billions of dollars "that we're being gouged because of someone like this who's trying to price collude," he continued, referring to Scott Sheffield, the founder and longtime CEO of Pioneer Natural Resources.
The FTC earlier this month barred Sheffield from serving on the board of directors of or as an adviser to ExxonMobil, which just acquired Pioneer, due to his alleged collusion with the representatives of the Organization of Petroleum Exporting Countries (OPEC) and OPEC+.
While welcoming the FTC's move, Pocan noted that "if you commit theft, the average sentence... in the United States is 23 months" and the multibillion-dollar profit that fossil fuel giants make from price gouging "is more than grand larceny theft."
🚨BIG: @RepMarkPocan applauds @FTC for revealing an oil price-fixing scheme that cost Americans billions from 2021-2023.
"I just did a little napkin math ... That's $175 million a year—just for people in my district—that we're being gouged." pic.twitter.com/maM8Uk6usY
— American Economic Liberties Project (@econliberties) May 15, 2024
"What else can we do to these oil companies that are ripping us off?" the congressman asked Khan, an appointee of President Joe Biden with "a pro-working families record."
The FTC chair responded that "price fixing and output reduction in a coordinated way can be criminal violations of the antitrust laws. As enforcers we can't specifically speak to what we're referring and what we're not, but as a general matter, it's been a priority of mine to make sure we are referring more criminal candidates to the Justice Department, because we need to make sure companies and executives aren't just treating fines as a cost of doing business and that they take seriously the rule of law."
Referencing a television show that takes place in federal prison, Pocan told her that "I would recommend 'Orange Is the New Black,' if we need to, to make a point. It would be helpful because we're feeling it at the pumps and clearly this kind of behavior, we know, isn't isolated."
Sharing a video of his remarks on social media, Pocan declared: "Unacceptable! A slap on the wrist isn't enough. I think jail time should seriously be considered."
As the American Economic Liberties Project (AELP) pointed out, Pocan wasn't the only lawmaker to reference the recent price fixing revelations during the Wednesday hearing; he was joined by Reps. Matt Cartwright (D-Pa.) and Rosa DeLauro (D-Conn.).
"Finally it's being noticed!" said AELP's Matt Stoller, who has written about the alleged collusion. "Dem House members get it!"
Stoller wasn't alone in welcoming the discussion in Congress—after days of limited attention on the issue among national figures.
"This illegal oil corporation price fixing conspiracy cost Americans as much as $2,100. Per year," saidMore Perfect Union, sharing a video of Pocan and citingThe American Prospect.
The Ohio AFL-CIO stressed: "Greedflation is not inflation. Pass it on."
Noting that Sheffield is getting a $68 million "golden parachute on his way out," former U.S. Labor Secretary Robert Reich argued Wednesday: "That money (and more) should be refunded to the American people. Not sent to his bank account."
Groundwork Collaborative executive director Lindsay Owens similarly said last week that "the Department of Justice should criminally prosecute Scott Sheffield and Congress should tax back the industry's windfall profits and issue every American a refund."
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Big Oil's Un-American Scheme to Price-Gouge Consumers
From ExxonMobil's long-running climate denial to Pioneer's recent price-fixing, it's clear this rogue industry's business model is deny, deceit, and delay.
May 09, 2024
You know how the oil industry is always saying the U.S needs to drill more to lower gas prices and protect energy independence? Well it turns out they've actually been scheming behind the scenes with the Organization of the Petroleum Exporting Countries to do the exact opposite.
A bombshell complaint filed by the Federal Trade Commission (FTC) last week reveals that Scott Sheffield, the former CEO of Pioneer Natural Resources—one of the largest oil producers in the Permian Basin—colluded with OPEC officials in an attempt to artificially limit supply and jack up prices.
The FTC's complaint alleges that Sheffield exchanged private WhatsApp messages with leaders at OPEC, assuring them that Pioneer and other Permian companies would pump the brakes on output in order to keep prices high. He even threatened to "punish" any companies that dared to ramp up production. I don't know about you, but to me it's hard to imagine anything more un-American and anti-competitive than that.
The FTC complaint is the latest proof: The fossil fuel industry will always put their greed above American consumers and fair competition.
This private coordination with OPEC glaringly contrasts with Big Oil's public rhetoric blaming the Biden administration for constraining U.S. production and raising energy costs—a bogus talking point that Republicans have been parroting for months now. The bad faith has been laid bare: Oil executives themselves are colluding with a foreign cartel to throttle supply and price-gouge American consumers to pad their own pockets.
These revelations fit into a broader pattern of the fossil fuel industry's deception and abuse. Just one day before the FTC filing, the Senate Budget Committee held an explosive hearing detailing how oil giants have waged a decades-long, industry-wide disinformation campaign to downplay the catastrophic climate damage that they knew their products would cause, all while raking in record profits. From ExxonMobil's long-running climate denial to Pioneer's recent price-fixing, it's clear this rogue industry's business model is deny, deceit, and delay.
Here's the kicker: Big Oil is about to get a whole lot more powerful. With it looking like the Exxon-Pioneer merger is going to move forward (without Scott Sheffield), and Chevron pursuing a $50 billion takeover of Hess, a few mega-corporations are rapidly consolidating to control our energy grid. Studies show that mergers like these are pretty certain to squash competition, send prices soaring, and concentrate massive political influence to block necessary climate action.
That's the grim future we face if we let them get away with it: A world where a handful of greedy oil oligarchs collude with OPEC to bleed us dry at the pump while knowingly burning our planet. Fortunately, cities and states are fighting back with lawsuits and legislation to make polluters pay for their lies and damages.
Last year, California joined the fight, suing Exxon, Shell, BP, Chevron, and their lobbying arm for deliberately deceiving the public about fossil fuels' climate impacts, aiming to force them to cough up billions for disaster recovery. And right now, states like Vermont are advancing bills to create climate "superfunds" funded by Big Oil's ill-gotten gains. In fact, New York just passed their polluter pay bill in the Senate this week, bringing New Yorkers and the nation one step closer to accountability for Big Oil.
But in order to truly rein in this reckless industry, we need help at the federal level. At a minimum, Congress should eliminate fossil fuel subsidies and strengthen antitrust laws. At the Department of Justice, leaders must investigate the industry's long history of spreading disinformation. And in the White House, President Joe Biden should declare a climate emergency and wield his powers to rapidly increase the production of clean energy resources.
For decades, Big Oil has ransacked our wallets, ravaged our environment, and rigged our democracy. The FTC complaint is the latest proof: The fossil fuel industry will always put their greed above American consumers and fair competition. It's time to make polluters pay.
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