Amazon co-founder ff Bezos turned a few headlines on Tuesday when he spoke in favor of President Biden’s $ 2 trillion infrastructure program and even endorsed Biden’s proposal to pay corporate taxes for it.
“We support the Biden administration’s focus on making bold investments in American infrastructure,” Bezos wrote on his company’s website. He added, as you would like, “we support raising the corporate tax rate.”
For those who wanted to find the devil in detail, it should be noted that Bezos’ approval was not unconditional.
“We recognize that this investment will require concessions from all parties, both in terms of features and how it is paid for,” he wrote.
But no one should be surprised that Bezos is in balance on the ship. Bezos’ statement, openly or otherwise, acknowledged some of the truths about the construction of public infrastructure in the United States.
One is that these projects are more than just paying for themselves. It was a record of public works projects dating back to the 19th century.
Another thing is that only the government can carry out most of this construction, as the project is generally too large or its benefits too scattered or hypothetical to attract private sector investment. The benefits after building the programs are received by private enterprises.
Third, companies like Amazon do not have to worry about raising corporate tax rates because they do not pay anywhere near that rate.
In 2020, Amazon paid $ 1.84 billion in income taxes on federal taxes on its $ 20.2 billion in profits. That’s about a 9.1% tax rate, which is much lower than a 21% statutory corporation. In 2019, its effective tax rate was 1.2%, and in 2018, a tax return of $ 129 million.
Leaving this point aside, let’s look at the potential impact of Biden’s program on Americans in general.
Biden’s plan has been the target of a flurry of debate over what is rightly described as “infrastructure.” Some conservatives claim that only physical structures, especially transportation projects such as roads, bridges, and airports, are “infrastructure.”
This will exclude Biden Plan items such as broadband access, school modernization, child care facilities, veterans’ departments, and other federal buildings.
It will also provide tax credits for the maintenance of clean energy, as well as for the repair of the American grid, to reflect the transition from fossil fuels to wind farms.
Also on the list will be Biden’s offer of $ 180 billion in additional funding for state research agencies such as the National Science Foundation and Academic Laboratories.
“After decades of not being invested, our roads, bridges and water systems are falling apart,” said the Biden administration. “Our electricity grid is vulnerable to catastrophic outages. “Too many people lack affordable, high-speed internet and quality housing.”
The Conservatives like to downplay many of these projects as the Democratic Party weakens. Here is Kevin D. Williamson from the National Review mocked that “this kind of project is pushing the buttons of all kinds of New Deal, Biden-generation Democrats, TVA, rural electrification.”
But here are the facts. The New Deal kept millions of Americans out of poverty during the Great Depression, bequeathed to us unspeakable projects still in use, including New York’s LaGuardia Airport and Los Angeles’ LUX.
Tennessee Valley authorities, which included reforestation of barren mountain forests, construction of flood reservoirs, dams, and a canal drain from one end of the valley to the other, lifted one of America’s poorest regions from insecurity.
Prior to TVA, one in 100 villagers in the valley had electricity, and the average per capita income was the national average. TVA has turned the valley into a leading American industrial area. More broadly, rural electrification changed everyday rural life for the better. Much more better.
Opponents of such projects were largely rooted in business interests. Utilities, for example, argued that they should have the right to provide electricity to residents, except that they did not, except for interest rates.
The truth of the Truth is that all of Biden’s ideas fall into the tradition of American public spending, the benefits are as indisputable as the disadvantages of investment. Without government funding, there would be no Hoover Dam or interstate highway system today.
Federal investment, as a share of the economy, has collapsed since the early 1960s, when it accounted for more than 7% of GDP. Today it is about half.
The United States was once a global leader in research spending. R&D accounted for 12% of the federal budget in the 1960s; by 2019 it had fallen to 2.8%.
As a result, according to MIT in 2015. According to the report, the first spacecraft to land on the first comet, four significant scientific achievements of the previous year. discovery of a new fundamental particle, the Higgs boson; the development of the fastest supercomputer in the world; և Research that points to new ways to meet global food needs. None was a US-led program.
Many business leaders like Bezos have learned lessons from earlier public investment. Government-funded projects ultimately bring profit to the private sector և bring benefits to society as a whole.
Individual companies would never undertake the construction of a national highway network. But the interstate system, which began under Dwight Eisenhower in 1956, reduced travel time to shore’s, thus reducing shipping costs by more than a third.
According to the American Society of Civil Engineers 2016 According to the report (which is undoubtedly interested in public construction), the interstate system, the construction of which cost $ 500 billion in 2016, earned $ 6 in profit for every dollar spent.
The development of the Internet was hampered by a communications monopoly owned by AT&T, which refused to allow data transmission over its telephone lines. That prompted Bob Taylor, a visionary officer at the Pentagon’s Advanced Research Projects Agency, to take matters into his own hands. Taylor funded the computer data network, originally known as ARPAnet, which is the offspring of the Internet.
Professionals like Williamson ridicule Biden for pointing to broadband access as a powerful infrastructure, but it is a statement from a privileged roof. “According to industry estimates, about 93% of Americans have access to broadband, those who do not live mostly in remote, rural areas.”
This is an old industry hoax playing with the definition of “entry”. These houses can theoretically have access, but monopoly pricing does not take it away from them. Williamson’s argument that those who want better service can simply move to cities does not take it seriously.
Broadband is essential for everyday life today, almost anywhere you live. Indeed, the lack of accessibility has been used to neutralize low-income communities.
Arkansas, for example, required Medicaid eligible residents to report regularly through the state website. But less than 55% of all residents have a broadband connection, և in some low-income countries the rate is less than 10%. (This was one of the reasons the federal judge overturned state labor laws.)
With moderate broadband access, the United States lags behind many other developed countries, where prices are higher than in most of the developed world. Who says that? Federal Communications Commission.
In its 2018 report, the FCC ranked 10th out of 28 comparable countries in the average speed of its fixed broadband service, 24th in mobile download speeds, 26th in the price of broadband with at least 100 reasonable speeds. megabits per second.
It is difficult to find out the reason for this disgraceful post. That is, the US government has ceded broadband development to private companies that provide richer districts with the best services, as most of the country has only one or two competing suppliers that can effectively charge monopoly prices. Public investment is especially needed to counteract these types of rents by private companies.
Bezos knows that public infrastructure spending means money in Amazon’s coffers. Better roads and other transportation infrastructure reduce the cost of delivering goods to customers on Amazon, and wider penetration means more customers are available for their online service. Thus, he missed the question of what “infrastructure” he liked and what he would like to give up.
The rest of the question is how to pay for Biden’s plan. With interest rates still at an all-time low, it would be cheaper for the government to finance the program through loans than it has been for almost any time since the post-war period.
As for the corporate tax rate increase, American CEOs may object, but let’s face it, for many large corporations, the mandatory tax rate is simply theoretical.
According to the Institute of Taxation and Economic Policy, 55 large corporations will pay net income tax on their profits in 2020. Some of them depended on government-funded transport and digital infrastructure, such as FedEx and Charter Communications.
These companies have good experience in taking advantage of tax breaks and loopholes. For example, Amazon is liberally using deductions for stock compensation, which has saved the company more than $ 3 billion in taxes over the past three years. Unspecified “tax credits” saved $ 1.5 billion.
For decades, America has been slashed by politicians, demanding that government budgets be tightened, labeling “investment” as “spending.” The state of the country’s infrastructure deficit has grown relentlessly.
Biden rightly demands a reversal of the trend. His critics claim that his vision is too broad, too imaginative. But when it comes to planning for the future, what is wrong with your imagination?