Wealth inequality isn’t just growing among individuals. It is also growing among corporations—and that is not good for the U.S. economy.
According to Bloomberg News:
Eighteen American businesses held 36 percent of corporate wealth in 2013, up from 27 percent in 2009, according to a report from Standard & Poor’s, a credit rating firm in New York. The bottom 80 percent have lost ground, with just 11 percent.
The top 1 percent includes all the big companies you might well imagine, including Microsoft, Google, Apple, Coca-Cola, and Ford Motor Company.
The top companies are holding ever more of their wealth as cash and outside the United States. The wealthiest 1 percent of corporations raised the share of their assets held as cash from 20.4 percent in 2009 to 23.6 percent in 2013. The rest of the corporate sector held cash balances that were worth less than 7 percent of their total assets.
- Apple is holding 78 percent of its $40.7 billion in cash overseas.
- Cisco is holding 93 percent of its $47.1 billion in cash overseas.
Among other things this behavior means that corporations are dramatically cutting their tax obligations to the U.S. government. The congressional Joint Committee on Taxation estimates that this corporate strategy cost the U.S. Treasury over $83 billion dollars in revenue this fiscal year.
Corporations, fearful that the government might take steps to force them to invest this money in the United States economy, are exploring new strategies. For example, some are merging with foreign companies so that they can legally establish themselves in lower tax countries.
Bloomberg News ends its story as follows:
“You could argue that companies that make a billion dollars and don’t pay taxes are freeloaders,” said Mitch Rofsky, president of the Better World Club, an insurer based in Portland, Oregon, and member of the American Sustainable Business Council, a group of small employers.
“It’s basically an issue of do our economic models work, is infrastructure supported, does government have the money it needs,” Rofsky said. “It’s unfair.”
Unfortunately under capitalism fairness is besides the point. What matters is power and our challenge is to build popular support for effective policies that privilege the public interest over the private.