Jamie Dimon claims the corporate tax cut is all about helping workers. Don't believe him.

Friday, 13 October 2017, 04:49:26 PM. JPMorgan CEO Jamie Dimon's plug for corporate tax cuts says it's all being done for workers. Don't buy it.

One of the most famous lines associated with a government sex scandal was uttered in 1963 by Mandy Rice-Davies, a party girl and peripheral player in the Profumo affair, which helped bring down Harold Macmillan’s Tory government. Informed during an appearance on the witness stand that one of the aristocrats snared in the scandal had denied knowing her, she giggled and replied, “Well, he would say that, wouldn’t he?”

The phrase instantaneously entered the British political lexicon. But it came swimmingly to mind Wednesday when I read an op-ed by Jamie Dimon, the respectable chairman and CEO of JPMorgan Chase. The piece on the NBC News website was headlined, “The real beneficiary of corporate tax reform? American workers.”

I thought: He would say that, wouldn’t he?

I’ve been beating the drum to put our individual interests aside and do what is best for the country as a whole. — JPMorgan Chase CEO Jamie Dimon, masquerading as a man of the people

Dimon’s op-ed, which he wrote wearing his hat as chairman of the Business Roundtable, is a full-throated defense of the sketchy “framework” for tax cuts issued last month by President Trump and congressional Republicans. The framework concealed its impact on middle- and lower-income Americans behind a scrim of hand-waving and magic asterisks; Dimon takes these subterfuges and runs with them.

“The framework has all of the key ingredients to fuel economic expansion,” he writes: “A business tax rate that will make the U.S. competitive around the world; provisions to free U.S. companies to bring back profits earned overseas; and importantly, tax relief for the middle class.”

He would say that, wouldn’t he?

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 1 Michael Hiltzik

The tax cutters in the Republican Congress and White House were very careful to dangle only a few details of their tax plan before the public, but fulsome in their claims that it would be a boon to the average American — putting “more money into the pockets of everyday hardworking people,” according...

The tax cutters in the Republican Congress and White House were very careful to dangle only a few details of their tax plan before the public, but fulsome in their claims that it would be a boon to the average American — putting “more money into the pockets of everyday hardworking people,” according...

(Michael Hiltzik)

Experts at the authoritative Tax Policy Center, a joint effort by the Brookings Institution and the Urban Institute, came to a different conclusion. They found that by 2027 the top 1% of American income earners (income of $732,800 and up) would pocket about 80% of the tax plan’s benefits. Despite what Dimon says, their gain is a loss to the average American worker.

Nevertheless, Dimon couches his pitch as one of self-abnegation. As chairman of the Business Roundtable, he writes: “I’ve been beating the drum to put our individual interests aside and do what is best for the country as a whole. Tax reform is important because strong businesses create jobs and higher wages.”

Leaving aside his faux description of the tax cut plan as “tax reform,” let’s examine how Dimon skates his way around hard reality.

Start with his assertion, based on an Ernst & Young analysis done for the Roundtable, that “a competitive 20% corporate tax reduction could support the creation of as many as 2 million new jobs if the tax savings went to new job creation.” Emphasis added, because that’s an “if” as big as the Ritz.

We know this because history tells us so. Dimon observes that in a recent Business Roundtable survey, “76 percent of CEOs of leading U.S. companies say that they would increase hiring if tax reform were enacted, and 82 percent would increase capital spending.”

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 2 Michael Hiltzik

One nauseating chore that comes up whenever congressional Republicans propose a tax cut is hunting down all the tax breaks for the wealthy concealed in its thickets.

The big one in the tax plan issued last week by the GOP and President Trump involves what’s known opaquely as “pass-through” business...

One nauseating chore that comes up whenever congressional Republicans propose a tax cut is hunting down all the tax breaks for the wealthy concealed in its thickets.

The big one in the tax plan issued last week by the GOP and President Trump involves what’s known opaquely as “pass-through” business...

(Michael Hiltzik)

Should they be believed? Long story short: no.

In 2004, Congress enacted a one-time amnesty allowing U.S. companies to repatriate earnings parked abroad at a bargain tax rate — 5%, rather than the top rate of 35%. Big business had lobbied for the break by pledging that the domesticated billions would be used to invest in their business and add jobs.

Instead, corporations spent the money on stock buybacks to benefit their shareholders and to fatten executive pay. A 2011 Senate subcommittee report determined that the 15 biggest companies taking advantage of the tax holiday, including Pfizer, Hewlett-Packard and IBM, actually cut jobs and reduced research spending. Between 2004 and 2007, IBM, which repatriated $9.5 billion, reduced its U.S. employment by 12,830 workers, or more than 9%. Its share buybacks increased from $7.3 billion in 2004 to $18.8 billion in 2007.

“There is no evidence that [the tax break] increased U.S. investment or jobs, and it cost taxpayers billions,” a U.S. Treasury report determined. That hoard of what USC business professor Edward Kleinbard calls “stateless income” now tops $2.6 trillion.

As it happens, a similar tax amnesty for stateless income is a linchpin of the framework’s corporate tax cut. The document says foreign assets held in illiquid form will be taxed at a lower rate than conventional earnings, though it doesn’t say how low. Corporations would be allowed to spread out the tax on those earnings over several years, another tax break.

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 3 U.S. Senate After Congress declared a repatriation tax holiday in 2004, many corporations that brought money back actually cut jobs; the right-hand column shows U.S. employment changes in 20014-2007. After Congress declared a repatriation tax holiday in 2004, many corporations that brought money back actually cut jobs; the right-hand column shows U.S. employment changes in 20014-2007. (U.S. Senate)

Dimon grouses that the U.S. tax system has “trapped more than $2.6 trillion outside the U.S.because American companies are penalized for bringing profits earned abroad back home.” That’s one way of looking at it. Another way is to say that American companies have chosen to leave those trillions in bank accounts abroad in order to avoid taxes on it. They’re responding to an incentive, but it’s their choice, not an act of God that leaves the money there.

Dimon further asserts, “under our current system, workers bear up to 75% of the corporate tax burden through lower wages.” His source for this is a 2006 study by economist William C. Randolph of the Congressional Budget Office.

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 4 St. Louis Federal Reserve Corporate profits have been soaring, even without a tax cut, reaching a record $1.8 trillion earlier this year. Corporate profits have been soaring, even without a tax cut, reaching a record $1.8 trillion earlier this year. (St. Louis Federal Reserve)

But as Harry Stein of the liberal Center for American Progress points out, that paper wasn’t an official CBO analysis and is flatly contradicted by the official CBO analysis, which reported last year that almost 80% of the total corporate tax burden was borne by households in the highest 20% of income earners, and 47% by households in the top 1%. We can safely assume that Dimon, who collected more than $27 million in compensation last year, is a member of the 1%. So how does his support of a corporate tax cut square with his plea to put “individual interests aside and do what is best for the country as a whole”?

Pleas by big business for a tax break because they’re “uncompetitive” under the current system—one of the bedrock themes of Dimon’s op-ed—need to be taken with a beaker of salt. The truth is that U.S. corporate profits have been on a tear under the current system, reaching a record $1.8 trillion in the first quarter of this year. Businesses have more than enough money to fund all the internal investment and job growth they wish. Giving them just a little bit more in the form of a corporate tax break would be good for their shareholders and CEOs, but still leave taxpayers and workers holding the bag.

Any argument you hear to the contrary should be greeted with Mandy Rice-Davies’ timeless quip. They would say that, wouldn’t they? They’d say anything to get a tax cut.

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 5 CAPTION

Drone footage reveals the devastation wrought by the deadly Tubbs fire in Santa Rosa. An astounding number of women have shared stories of alleged sexual misconduct by producer Harvey Weinstein. A USC administrator has left his post in the wake of allegations that he sexually harassed female colleagues. President Trump has nominated Kirstjen Nielsen, a top aide to Chief of Staff John F. Kelly, to head the Department of Homeland Security.

Credits: Associated Press, Travis Geske, Getty, KTLA

Drone footage reveals the devastation wrought by the deadly Tubbs fire in Santa Rosa. An astounding number of women have shared stories of alleged sexual misconduct by producer Harvey Weinstein. A USC administrator has left his post in the wake of allegations that he sexually harassed female colleagues. President Trump has nominated Kirstjen Nielsen, a top aide to Chief of Staff John F. Kelly, to head the Department of Homeland Security.

Credits: Associated Press, Travis Geske, Getty, KTLA

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 6 CAPTION

Drone footage reveals the devastation wrought by the deadly Tubbs fire in Santa Rosa. An astounding number of women have shared stories of alleged sexual misconduct by producer Harvey Weinstein. A USC administrator has left his post in the wake of allegations that he sexually harassed female colleagues. President Trump has nominated Kirstjen Nielsen, a top aide to Chief of Staff John F. Kelly, to head the Department of Homeland Security.

Credits: Associated Press, Travis Geske, Getty, KTLA

Drone footage reveals the devastation wrought by the deadly Tubbs fire in Santa Rosa. An astounding number of women have shared stories of alleged sexual misconduct by producer Harvey Weinstein. A USC administrator has left his post in the wake of allegations that he sexually harassed female colleagues. President Trump has nominated Kirstjen Nielsen, a top aide to Chief of Staff John F. Kelly, to head the Department of Homeland Security.

Credits: Associated Press, Travis Geske, Getty, KTLA

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 7 CAPTION

Over 160,000 acres have been destroyed in northern California fires.

Over 160,000 acres have been destroyed in northern California fires.

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 8 CAPTION

The death toll from the Northern California fires has reached 17. A wounded Mandalay Bay security guard warned hotel officials about a gunman before the Las Vegas massacre. Harvey Weinstein is facing more sexual assault and harassment allegations. The FBI’s investigation into bribery and corruption in college basketball continues to expand. 

The death toll from the Northern California fires has reached 17. A wounded Mandalay Bay security guard warned hotel officials about a gunman before the Las Vegas massacre. Harvey Weinstein is facing more sexual assault and harassment allegations. The FBI’s investigation into bribery and corruption in college basketball continues to expand. 

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 9 CAPTION

A Northern California firestorm is one of the worst in state history, officials say. The Dodgers are heading to the NLCS after beating the Diamondbacks Monday night. Police have dramatically changed their account of how the Las Vegas massacre began. The Los Angeles Times has named a new editor in chief. 

A Northern California firestorm is one of the worst in state history, officials say. The Dodgers are heading to the NLCS after beating the Diamondbacks Monday night. Police have dramatically changed their account of how the Las Vegas massacre began. The Los Angeles Times has named a new editor in chief. 

jamie-dimon-claims-the-corporate-tax-cut-is-all-about-helping-workers-don-and-apos;t-believe-him photo 10 CAPTION

A wind-fed wildfire surged over the Anaheim Hills on Monday, burning several homes and forcing thousands to evacuate as fire crews struggled to battle the rapidly growing blaze.

A wind-fed wildfire surged over the Anaheim Hills on Monday, burning several homes and forcing thousands to evacuate as fire crews struggled to battle the rapidly growing blaze.

Keep up to date with Michael Hiltzik. Follow @hiltzikm on Twitter, see his Facebook page, or email michael.hiltzik@latimes.com.

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