New Analysis: An Anti-Monopoly Tax Agenda Will Give Small Businesses the Chance to Thrive

New brief from the Roosevelt Institute and the Institute for Local Self-Reliance shows how our tax code exacerbates corporate concentration at the expense of small businesses

March 9, 2023
Alice Janigro
(212) 444-9130

New York, NY — Over the last five years, a resurgence of advocacy to break up big companies has been inspired by the rise of mega-companies like Amazon, Meta, and Google. Small business owners, public interest organizations, and federal regulators have focused on updating antitrust law to combat the harms of monopolistic power on entrepreneurs, customers, and workers. Yet a lesser-known culprit of rising monopoly power—our tax code—also holds promise for fighting market concentration. Since the 1970s, both the US tax code and its antitrust laws have been influenced by the “big is better” ideology. Weak antitrust enforcement and unequal tax treatment have permitted the concentration of economic power, allowing large corporations to exercise their political power to shape tax policy even more to their benefit. As a result, the American public is paying the price for big corporations’ tax-dodging practices and government subsidies.

Today the Roosevelt Institute, in collaboration with the Institute for Local Self-Reliance (ILSR), launched the first brief in Roosevelt’s “Taxing Monopolies” series: “Tax Dodging Is a Monopoly Tactic: How Our Tax Code Undermines Small Business and Fuels Corporate Concentration.” In this new brief, ILSR authors Stacy Mitchell, ILSR’s co-executive director, and Susan Holmberg, political economist and senior editor and researcher at ILSR, argue that the US’s pro-monopoly tax system is undercutting small, independent businesses and starving communities of these businesses’ numerous economic and political benefits. The authors use the story of Amazon’s rise to dominance as one of the biggest monopoly powers in our economy to illustrate why antitrust and small business advocates must include tax policy as part of the strategy for breaking up big business.

“The benefits of supporting the creation and growth of small businesses are plentiful and run the gamut—from boosting worker power to fostering greater social connectedness and civic participation,” says Mitchell. “Progressives interested in clamping down on monopolies must incorporate building a fairer tax code into their strategy.”

In their issue brief, the authors:

  • Outline the specific practices of Amazon’s tax-dodging business strategy that fueled its rise while disadvantaging small businesses;
  • Show how the rise of “free market,” “big is better,” and “cut to grow” ideologies from the 1970s created a feedback loop in which corporations compounded political and economic power to build a tax code that crushes small businesses;
  • Detail the negative effects that come from losing small businesses, including declining wages, a loss of innovation, and the authoritarian threat stemming from the predominance of monopolistic power in our economy; and
  • Provide a blueprint of policies that advocates can pursue to create a fairer, anti-monopoly tax system, including implementing a progressive corporate tax rate, stopping corporate subsidies, and investing in small businesses.

“An anti-monopoly tax agenda that centers small businesses is more than just smart policy—it’s smart politics,” says Holmberg. “Since the 1970s, conservatives have used the faulty allure of deregulation and low taxes to dupe small business owners into believing that they’re on their side. It’s time we rewrite this narrative and show the promise of progressive tax reform for supporting small businesses.”

This brief builds and expands on a 2022 essay series, “Tax and Monopoly Focus: Reframing Tax Policy to Reset the Rules of the Monopoly Game,” published in partnership with the Balanced Economy Project and Tax Justice Network.