How Foreign Tax Repatriation Explains Everybody’s Feelings About Hillary Clinton
David Dayen has a nice piece in the New Republic in which he reads the tea leaves and concludes that Hillary Clinton and Chuck Schumer are likely to allow foreign companies to bring back overseas profits at a reduced rate in order to fund elements of her agenda. Dayen frames this as a huge corporate tax cut — with good reason — and therefore a betrayal of the basic progressive principle that we shouldn’t be cutting taxes for corporations.
But there is a strong case for a Clinton administration to allow corporate taxes to come home, and it illustrates how her pragmatism and desire for real policy victories is often in direct conflict with progressive principles.
The case for allowing reduced repatriation rates goes something like this: The moment Republicans have the power to bring back overseas tax dollars at a reduced rate they will do so — it will be in every GOP presidential candidate’s platform from now until the end of time. This means that over the next 40 years the odds that those profits will be brought home at a reduced rate are close to 100%. Unless Democrats can hang on to the presidency for an entire generation, that money is coming back in a way that’s favorable to corporations.
Given that the money is coming back, the question then becomes who will get to spend it. If the GOP is in charge when it comes home, that money will likely go toward tax cuts for the wealthy. If Democrats are in charge when it comes home, the money can be spent on social programs. As long as Democrats refuse to allow that money to come home at a reduced rate, it essentially remains earmarked for regressive tax cuts.
So there are two ways to look a potential Clinton plan to allow to reduced repatriation rates. From the principled progressive activist viewpoint, it’s a corporate tax cut. But from another viewpoint, the one likely held by Clinton and Schumer, it’s taking money that is earmarked for regressive tax cuts (as long as both parties stick to their current positions) and using it to fund social programs. In other words, a pragmatist like Clinton can look at the issue and ask what the point of maintaining a hard line against corporate tax cuts is if the corporations are ultimately going to get that tax cut and the revenue that come in alongside it will be spent on Paul Ryan’s agenda?
In many ways, this is a microcosm of how Clinton can be viewed so differently by people whose political views are similar. For those skeptical of Clinton’s motivations, overseas repatriation can be viewed as a betrayal of progressive principles. But for those who admire her ability to get things done, it can be viewed as a pragmatic, cost-free way to fund progressive policy goals.