Rep. Alexandria Ocasio-Cortez doesn’t think Amazon should get special treatment. Amazon doesn’t want to be bothered by politicians. Both of them are right, but neither of them have the answer – common sense, however, does.
The world knows that New York City “competed” with more than 200 cities to attract Amazon. After the tech giant canceled its plan to move in to Long Island City, Ocasio-Cortez celebrated because, in her words, she and her comrades “defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”
Presumably, Ocasio-Cortez wants Amazon to pay its fair share of taxes – especially with the news that Amazon boasts $11.2 billion in profits, but is using tax code provisions to avoid having to pay any taxes. Her answer to that corporate greed, of course, is an ever-larger government and higher tax rates.
But big government isn’t the answer to the Amazon-New York tax story.
First, higher rates produce less tax revenue over time because they encourage tax avoidance and reduce incentives. Lower rates produce more revenue over time.
Second, big, centralized government, always and everywhere, descends into a spoils competition. Whether it’s for trillions in spending or endless tax deductions or credits, if government is handing them out, it’s human nature for business, and the people who run them, to take them.
The problem for business is that stories of huge corporate welfare gives the likes of Ocasio-Cortez all the fodder she needs to demand government spoils for her voters.
Consider the 2008 government bailouts. Hundreds of billions of taxpayer money was appropriated to massive corporations. (The good news is much of it was paid back.) Since then, quantitative easing, or the more-than-five-fold increase in the Fed’s Balance sheet, largely benefited Wall Street.
A case could be made that the Fed stabilized the economy by doing so. Others, on the right and the left, can make the argument that much or all of that was nothing more than preferential treatment between big government and big business. There is little doubt, however, that such “corporate welfare” serves as a logical rallying cry for the left. “Trillions for them should mean trillions for us!”
Beyond a rallying cry, such expenditures, mathematically, equal big government – and, as Thomas Jefferson warned us: “Government can do something for the people only in proportion as it can do something to the people.”
So, if government can bailout industries too big to fail, it can prosecute a war on coal and harass Amazon. It can usher in ObamaCare -- or a Medicare for All law that could outlaw private health care insurance.
Common sense, on the other hand, tells you that a flat tax, lower rates and smaller government means less government spoils and less government power. Business should finally learn that lesson before the alligator it feeds on the left comes for them.
Thomas G. Del Beccaro is the author of "The Divided Era."