Changing Narratives: Corporate Tax Policy Has Undermined Child and Family Well-Being

New Roosevelt Institute tax series analyzes the intersection of corporate taxation and child and family well-being policy

January 23, 2024
Ariela Weinberger
(212) 444-9130
media@rooseveltinstitute.org

New York, NY — In the last few years, the US corporate income tax has become one of the most hot-button issues in US politics, but corporate tax debates are often devoid of concerns for the ultimate impacts of reform on children and families. With the most recent tax reform effort, the 2017 Tax Cuts and Jobs Act (TCJA), Republican legislators dramatically cut the corporate tax rate, eliminated its graduated nature, and included many other provisions favoring large corporations and business entities. In 2025, many of the central provisions of the TCJA are set to expire, opening up a significant opportunity for corporate tax reform that improves the lives and well-being of families and children. Time and again, empirical evidence has shown that cutting the corporate tax fails to drive shared economic benefits. As elected officials, tax reform advocates, and the Biden administration work to reinject progressivity and fairness back into the US tax code, we must ensure that implications for child and family well-being are prioritized. 

Today, the Roosevelt Institute released two new reports that together analyze the intersection of corporate taxation and its impact on child and family well-being. 

  • A Mapping of the Full Potential of US Corporate Taxation to Enhance Child and Family Well-Being proposes a holistic framework for assessing the impact on well-being of the corporate tax through its capacity to raise revenue for public services, balance out unequal distributions of economic resources, regulate economic activity, and, more broadly, build public trust in democracy. Authored by Emily DiVito, deputy director, Corporate Power, and Niko Lusiani, director, Corporate Power, the brief further demonstrates that even beyond its revenue-raising potential, a vibrant corporate tax policy is vital to all aspects of a thriving economy—and critical to the well-being of children and families, investment in whom has been woefully inadequate in recent decades.
  • Fifty Years of ‘Cut To Grow’: How Changing Narratives around Corporate Tax Policy Have Undermined Child and Family Well-Being is an assessment of the central worldviews and set of assumptions driving key US corporate tax reform moments in history—and their consequences for the well-being of children and families in the US.  Authored by Reuven S. Avi-Yonah, Irwin I. Cohn Professor of Law at the University of Michigan, DiVito, and Lusiani, the paper looks back over the past 50 years of corporate tax reforms and demonstrates just how entrenched the neoliberal narrative around tax cuts has become in policymaking circles. It concludes with reflections on the political economy of taxing corporations, and how a more holistic understanding of the revenue and regulatory roles, in particular, of corporate tax policy might help us overcome what has become a 40-year stalemate in efforts toward real reform.

Insight from the Authors:

“We have a false idea in the US that corporate tax policy is unrelated to equitable social reforms,” said DiVito. “However, strong corporate tax policy is vital to all aspects of a thriving economy. And the failing to reimagine a more ambitious and comprehensive use of corporate tax policy prevents us from achieving a more equitable, sustainable, and democratic economy and society for all families.”

“Because the largest corporate shareholders pay very little in taxes and because the majority of today’s corporate tax falls on rent-seeking, the corporate tax is an effective and efficient way to tax capital. It is also an essential way to limit and regulate the immense political and economic power of corporations and their executives,” said Lusiani. “Returning to a steeply graduated corporate tax rate would not only help level the playing field and check the monopolistic tendencies that limit economic opportunities for families and their children, but it would also allow the government to use the full power of the corporate tax to again provide a sufficient revenue source to make significant investments in public-interest programs and services.” 

“Corporate tax policy since Reagan has been driven by the trickle-down economics narrative that cutting the taxes on ‘job creators’ will benefit less wealthy US taxpayers. Such an idea is often offered in tandem with the notion that this is the only way tax policy can help American families,” said Avi-Yonah. “But this just isn’t true. In fact, this false ‘cut-to-grow’ narrative has made it very difficult to argue for a more expansive, progressive vision of corporate tax reform—contributing to a decades-long stalemate in efforts toward real comprehensive corporate tax reform. Now is the time to reverse this trend with a more historically grounded support of the corporate tax.”