Corporate Profits and Monopoly Power: The Critical Role of Tax Policy
March 14, 2024
By Niko Lusiani
Below is an excerpt from Niko Lusiani’s remarks at the Minnesota House Taxes Committee’s March 5, 2024, informational hearing.
- Corporate profits at the top of the US business hierarchy have skyrocketed in recent years, and much of these earnings are essentially economic rents. These profits are not being used to support workers, drive innovation, boost real productive investment, or support the public good through taxes. Instead, they are being siphoned off to wealthy shareholders.
- The concentration of corporate earnings among the top 10 percent of corporations is driven, in large part, by the ability of these firms to capture market shares through monopolistic practices. Market concentration in the US has risen sharply over the past decades, and with this market power has come political power to shape the rules of the game.
- The largest multinational corporations have strategically and persistently used this power to decrease their tax costs. The federal corporate income tax is a shadow of itself. The lowering of rates, the weakening of tax authorities, and the ease with which large firms can avoid taxation have all played a role. While the corporate tax was once a key tool to resource public goods and level the economic playing field, today the corporate tax code raises little and actively deepens market concentration at the top.
- Corporate taxation is a critical tool to raise revenue, level the playing field, and build public trust and citizen morale. We can return to this, but only if we have the courage to enact commonsense measures which may not please those most economically privileged. Minnesota has taken and can continue to take a real leadership position around corporate tax transparency, with positive ripple effects across the country and across the world.
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