Daily News: I understand that. I wanted to draw a distinction, though. Because in your speech you mention the financial industry and you focused on corporate America, the greed of Wall Street and corporate America. So I wanted to get a sense of corporate America, as the agent of American destruction.Let's see - Sen. Sanders is from Vermont.
Sanders: General Electric, good example. General Electric was created in this country by American workers and American consumers. What we have seen over the many years is shutting down of many major plants in this country. Sending jobs to low-wage countries. And General Electric, doing a very good job avoiding the taxes. In fact, in a given year, they pay nothing in taxes. That's greed.
That is greed and that’s selfishness. That is lack of respect for the people of this country.
The State of Vermont has invested its citizens tax money in various funds such as the Vermont Higher Education Trust Fund (VHETF). The VHETF includes an investment of some $6.2 million in the Vanguard Institutional Index Fund (VINIF). This VINI Fund is an investor in General Electric, as it holds about $3.6 billion in GE shares. If VINIF returns 5% on investments, the VHETF earns about $310,000.
So, if GE were to pay income taxes as Mr. Sander asserts rightly* they mostly are not, where would this "tax money" come from? Why from the profits, of course. Profits that now get paid to workers and to shareholders, the real owners of General Electric. In addition to Ma and Pa Mainstreet who might own a few shares (or even many shares), one of the owners (investors) of GE is Vanguard Institutional Index Fund, of which the State of Vermont Higher Education Trust Fund owns shares. So when GE sends profit money to VIIF, VIIF spreads that money around to its owners, including the VHETF.
As you might gather, any lessening of profits impacts VHETF by reducing the payout it receives from the VINIF. Who suffers then? Why the citizens of Vermont, that's who.
So, if Mr. Sanders is suggesting that GE should put jobs in high wage areas (say California or New York) and not avoid taxes (which is not a crime, by the way, unlike tax evasion) but increase the cost of doing business, then he is in favor of hurting the people of Vermont by decreasing the revenue of their trust funds.
The State of Vermont has other holdings for things like pension funds. According to my reading of this, these include investments in a number of non-US companies, which it is clear are unlikely pay much in the way of U.S. taxes. Indeed, the Acadian International Equity Fund apparently really doesn't invest in the U.S.:
The fund objective is to provide long-term capital appreciation through a portfolio of non-North American Stocks that is sufficiently diversified to minimize investment risk. This will include stocks in both large and small-cap issuers as well as opportunistic exposure to issuers in the emerging markets.Golly, Mr. Sanders, your very own home state is not supporting American workers by investing in American companies? Why aren't you all over that?
*Who pays corporate taxes?:
In the case of the corporate income tax, as the Harvard Business School’s Mihir Desai put it in an interview I recently did with him and his HBS colleague Bill George, “that tax is going to be borne by shareholders, workers, or customers.”Mr. Sanders really ought to be arguing that U.S. corporate taxes be lowered to meet or be less than of other countries so that companies have no incentive to locate overseas and that the corporate tax burden doesn't fall so heavily on workers. You want to "disincentivize" corporate tax games? Lower taxes so that companies have no reason to play them.
If a country allows free capital flows and free trade and has a corporate tax rate much higher than that of its neighbors, investors can choose to buy shares in companies elsewhere that face a lower tax, and corporate management can choose to move operations abroad. Consumers, meanwhile, can buy from foreign suppliers. By comparison, workers are pretty immobile. It’s hard for them to switch employers, let alone countries. So the tax lands on them, in the form of lower wages and/or skimpier benefits.
Of course he is not arguing that. He wants high taxes to pay for his socialist vision of utopia, or, as I prefer to call it, "fantasyland."
You can attempt to decipher Mr. Sander's tax plan here. Before he drives all current U.S. companies overseas,
Senator Sanders would use the revenue gained by closing these loopholes to put at least 13 million Americans to work rebuilding our crumbling roads, bridges, railways, airports, public transit systems, ports, dams, wastewater plants, and other infrastructure needs.