Want to really help children and families? Tax corporations.

Bipartisan tax policy breakthroughs are rare in Washington these days. So, as the Senate considers a bipartisan tax bill; 16 million children Many low-income families eligible for the Child Tax Credit (CTC) are reluctant to question what they are being offered in exchange: a package of tax breaks for the nation’s largest corporations. But history shows that cutting taxes for the nation’s most powerful corporations in exchange for investing in our children has real costs. While the significant benefits of improved CTC may be worth it, this deal “Win-win”.

One simple and effective measure for determining tax transactions is to ask who benefits. This agreement will undoubtedly directly benefit millions of children and their families. Strengthen CTC. Raising children in America is expensive. Families, especially low-income families, often face impossible trade-offs between putting food on the table, paying rent, and paying for child care. Expanding the CTC will provide modest but meaningful economic relief to children and their families. In the first year alone, the proposed enhanced CTC will Estimation 400,000 children above the poverty line. And importantly, the benefits of CTC go beyond just families with children. In addition to alleviating child poverty, economic sense But recently the study It also shows that we all actively benefit from the long-term economic and financial benefits of investing in the next generation.

But the other side of this proposed tax deal, namely the extension of some specific corporate tax provisions introduced by the Trump tax cuts, would arguably be used almost exclusively by the most profitable companies and their It will only benefit a small portion of shareholders.

In theory, allowing businesses to quickly deduct capital expenditures, interest payments, and expense review expenditures would further encourage investment and innovation, which are fundamental to economic prosperity. However, today’s economic reality is not a theoretical practice. The reality of American business today is that the top 10 percent of America’s publicly traded companies are currently 92% of profit before tax, up from 73 percent in the early 1970s. In contrast, most small and medium-sized public corporations operate at a loss and therefore pay no federal income taxes.

This is the main reason why business provisions, which are central to transactions regarding investment decisions and expenditures for research costs, benefit only the most profitable companies and their shareholders. Allowing companies to spend on research and investment primarily benefits companies that already earn a lot of money. This does not benefit the most innovative and pioneering startups, which are in their early stages and are not yet profitable enough to benefit from expenses.More broadly, corporate leaders respond. much less The ability to immediately expense investment decisions is lower than previously thought, and there is no evidence that capital expenditures will increase, particularly when expenditures are made. retroactive.Just relax the restrictions on interest deductions encourage Companies become indebted and vulnerable to economic shocks and private equity takeovers.

In contrast to the near-universal benefits of improved child tax credits, the deal’s corporate tax provisions target relief to the most profitable companies and wealthy shareholders who need it least. It looks like.

Perhaps this deep inequity in who benefits from this tax deal is just the price of making sausages in 2024. But the history of corporate taxation in the United States shows that truly transformative investments in the well-being of children and families do not come from dividing the minimum amount into thirds. Common features of corporate tax cuts.Instead, we need to take a step back and reconsider for what and for Who Corporate tax exists.

Over the past half century, U.S. corporate taxes have been discussion I’m falling into a familiar pattern. On the one hand, they argue that corporate taxation provides the revenue base needed to invest in programs that support children and families. The other side is—by mistake It turns out that taxing corporate income takes money away from investment, so cutting corporate taxes increases economic growth, creates jobs, and, in turn, promotes the ability of families to support themselves and their children. The dominance of this “cuts for growth” thinking blinds us to a more comprehensive, history-based approach to taxing businesses that can actively help grow the economy for everyone. I did.

The mainstream from the early 20th century to the 1960s was story Regarding corporate tax reform, the idea was that taxes should be levied to raise revenue and structure markets in ways that level the playing field for all economic agents. As a result, for much of this history, federal corporate taxes were levied at much more graduated rates than today’s flat rate of 21%, allowing wealthy shareholders to avoid taxes and accumulate capital and political power in return. It was designed so that it couldn’t be done. American families and their children.

that changed 1970s and 1980s “Cut to Glow” Myths have taken root in the making of tax policy, resulting in dramatic economic benefits for corporations and the wealthy, while undermining the government’s ability to fund and provide services for the public benefits programs that low-income households depend on. It has been damaged.The past 40 years of “death by cutting 1,000 jobs” corporate tax policy also contributed. fuel The rise of the dominant incumbent “superstar” companies as we know them today. The concentration of economic control in the hands of a few hundred companies meant higher prices, inferior products, and lower prices for working families. wageinnovation and productivity are reduced, and supply chains are compromised.

After all, children thrive when economic outcomes are widely shared and everyone has a chance to succeed. The child tax credit discussed this week is clearly beneficial. But we would do well to reconsider how we ended up in a political environment that trades child welfare policy for the interests of big business. We will learn lessons from the past, provide support, raise revenue, and rebalance power as we look to the possibility of more comprehensive tax reform in 2025, when most of the remainder of the Trump tax cuts expire. We need to use corporate tax as a tool. Create an economy that benefits consumers and working families.

Nico Rugiani, Emily DiVito, and Reuven Avi-Yona are corporate power researchers and authors of the new Roosevelt Institute Report on taxes and child welfare.