The Morning Dispatch: Tax Hikes On the Horizon

Happy Thursday! We heard from 31 of the top-50 TMD March Madness pool winners yesterday, but we want to make sure everyone who earned a prize receives one! If you’re one of those final 19, email us at members@thedispatch.com with “MARCH MADNESS” in the subject line, and your ESPN and bracket name. Last call!

Quick Hits: Today’s Top Stories

• The International Monetary Fund (IMF) projected the global economy will grow 6 percent this year, the largest expansion since at least 1980. The IMF’s expectation was revised up from 5.5 percent in January.

• The Biden administration announced on Wednesday it is reinstituting $235 million in economic assistance and humanitarian aid to the Palestinians, reversing cuts the Trump administration made in 2018.

• Department of Homeland Security officials confirmed Wednesday that the task force President Joe Biden set up to reunify the remaining families still separated by the Trump administration’s zero-tolerance policy has yet to reunify a single family.

• The European Medicines Agency concluded Wednesday that “unusual blood clots” should be listed as “very rare side effects” of AstraZeneca’s COVID-19 vaccine. The agency reported that, among 25 million people receiving AstraZeneca’s shot, there were 62 cases of cerebral venous sinus thrombosis and 24 cases of splanchnic vein thrombosis, a combined 18 of which were fatal.

• The United States confirmed 74,922 new cases of COVID-19 yesterday per the Johns Hopkins University COVID-19 Dashboard, with 6.5 percent of the 1,159,459 tests reported coming back positive. An additional 2,577 deaths were attributed to the virus on Wednesday, bringing the pandemic’s American death toll to 559,086. (This spike is likely attributable to the clearing out of a post-holiday data backlog.) According to the Centers for Disease Control, 35,484 Americans are currently hospitalized with COVID-19. Meanwhile, 2,884,580 COVID-19 vaccine doses were administered yesterday, with 109,995,734 Americans having now received at least one dose.

Biden Likes Tax Hikes

The Treasury Department released a report on Wednesday detailing the Biden administration’s proposed tax hikes to fund the president’s $2 trillion American Jobs Plan (AJP), a mammoth infrastructure-ish bill that Democrats aim to pass through reconciliation before July 4. The administration claims the plan will offset the eight years worth of projects included in the AJP by raising $2.5 trillion over 15 years.

If enacted, the Made In America Tax Plan would double the global minimum tax rate for American multinational companies to 21 percent, replace fossil fuel subsidies with incentives for renewable energy production, and impose a 15 percent minimum tax rate on the book income of high-profit companies that pay little or no income taxes. 

Also in the bill is a proposal to raise the overall corporate tax rate from 21 percent to 28 percent, though Biden told reporters Wednesday that he is open to compromising on that figure so long as taxes aren’t increased on Americans making less than $400,000. “I’m willing to listen to that,” Biden said. “But we gotta pay for this. … I’ve come forward with the best, most rational way, in my view the fairest way, to pay for it, but there are many other ways as well. And I’m open.”

A 28 percent corporate tax rate would be higher than the global average of 23.85 percent per the Tax Foundation, but lower than the 35 percent rate that was in place in the United States prior to the passage of Republicans’ Tax Cuts and Jobs Act in 2017. For portions of the 1950s and 1960s, the corporate tax rate exceeded 50 percent.

Republicans are, unsurprisingly, opposed to partially rolling back one of their biggest legislative accomplishments of the past few years. “These sweeping tax hikes would kill jobs and hold down wages at the worst possible time, as Americans try to dig out from the pandemic,” Senate Minority Leader Mitch McConnell said last week.

Biden got a little heated discussing the plan at the White House yesterday, lashing out at what he argues is GOP hypocrisy. “I didn’t hear any of our friends, who are criticizing this plan, say that the corporate tax cut, which added $2 trillion to the debt—the Trump tax cut, $2 trillion—$1.9 trillion in debt — wasn’t paid for, the vast majority of which went to the top 1 percent of the wage earners,” he said. “I’m not trying to punish anybody. But damn it, maybe it’s because I come from a middle-class neighborhood, I’m sick and tired of ordinary people being fleeced.”

Biden pledged to have “good-faith negotiations” with “any Republican who wants to get this done,” but GOP senators—having just been ignored in negotiations over the American Rescue Plan—are wary. “In good faith, our group of 10 Republicans worked together to draft a sixth Covid-19 relief package earlier this year,” read a joint press release yesterday from Sens. Susan Collins, Lisa Murkowski, Mitt Romney, and seven others. “The Administration roundly dismissed our effort as wholly inadequate in order to justify its go-it-alone strategy. Fewer than 24 hours after our meeting in the Oval Office, the Senate Democratic Leader began the process of triggering reconciliation which precluded Republican participation and allowed for the package to pass without a single Republican vote.”

Still, Biden might actually need to negotiate this time around: Sen. Joe Manchin—Democrats’ 50th vote—has made clear his opposition to raising the corporate tax rate to 28 percent, saying he’d be much more comfortable at 25 percent. “As the bill exists today it needs to be changed,” Manchin told WVMetroNews earlier this week. “This bill will not be in the same form you’ve seen it introduced or see people talking about it.”

Treasury Secretary Janet Yellen is one of those people talking about the plan. In a call with reporters yesterday, she said the AJP would end the “race to the bottom” in tax rates around the globe. “Our tax revenues are already at their lowest level in generations,” she said. “If they continue to drop lower, we will have less money to invest in roads, bridges, broadband, and R&D.” 

Yellen is also rallying her counterparts internationally, seeking their cooperation to establish a 21 percent global minimum tax rate. Finance ministers from the Group of 20 economies said Wednesday that they plan to agree on a figure for all partner countries by July. The 2017 Tax Cuts and Jobs Act established a 10.5 percent tax on global intangible low-taxed income (GILTI) in an effort to discourage U.S. companies from shifting assets and profit overseas; the Biden administration wants to double that tax.

But experts warn that tax hikes have hidden consequences. Ryan Young, a senior fellow at the Competitive Enterprise Institute, raised the alarm about the tax plan’s rent-seeking dynamic, arguing Jeff Bezos’ praise of corporate tax hikes earlier this week should be a warning sign for lawmakers. “Anytime you have a policy—especially one like this one where you have big businesses like Amazon saying, ‘Yes, we favor this!’—that is an indicator that they can probably use that to their advantage to squash smaller competitors,” he told The Dispatch.

If the bill is passed, Young explained, large American corporations will likely lobby for tax hikes in lower-tax countries, allowing U.S. companies to raise foreign rivals’ costs without improving their own products or giving consumers better deals.

The Treasury Department’s report defends Biden’s plan as a “fairer tax system that rewards labor,” but Young maintains that higher corporate rates will affect workers, shareholders, and customers—not just C-suite executives. “Corporations don’t actually pay corporate taxes—individuals do,” he said, adding that companies pass on the costs of corporate tax hikes to laborers by cutting wages or hiring fewer employees. “And if a company reports lower profits, lower profits means lower returns for shareholders, which means ordinary people have a harder time saving for retirement.”

Yellen claimed that revenue generated by the Made In America Tax Plan would pay for investments that would boost GDP by 1.6 percent in just three years. But an analysis by the non-partisan Penn Wharton Budget Model released Wednesday found that, under Biden’s American Jobs Plan, GDP would decrease by 0.9 percent by 2031 and 0.8 percent by 2050.

The Tax Foundation projects a similar decrease in GDP should Biden’s tax increases become law. “We think—using our tax model—that just raising the corporate rate to 28 percent would shave off almost a percentage point of GDP and impact 159,000 jobs and reduce wages,” Tax Foundation Global Projects vice president Daniel Bunn told The Dispatch.

‘I Became A Journalist … Because I Care About Justice’

You may have never heard of Maria Ressa, but she’s one of the most influential journalists working today. She’s been reporting on Southeast Asia for decades, and in 2012 helped found Rappler, a news site launched to “hold the line” in her home of the Philippines, acting as a grounding force for moderates, defenders of democracy, and future generations amid President Rodrigo Duterte’s strongman takeover of the archipelago.

But Ressa—and countless other journalists in the region—have faced increasing persecution from authoritarian leaders in recent years. Ressa returns to court today, where she’ll face her 10th criminal case and third case related to an investigative piece she wrote in 2012. Taken together, the numerous trumped-up charges against Ressa could land her nearly 100 years in prison.

Charlotte spoke to Ressa last week, and the result is one of the best pieces we’ve published at The Dispatch: about Ressa and her career, but also the Philippines, Rodrigo Duterte, and the role of the press more broadly. Here are some highlights.

How does Ressa view her role? In increasing autocratic conditions, can she be “just” a journalist? Is she an activist? A politician?

Maria Ressa remembers her arrest and detention by President Duterte’s government on February 13, 2019, “the day before Valentine’s Day,” as a moment of clarity. When agents of the National Bureau of Investigation (NBI) unceremoniously entered the Rappler newsroom around 5 p.m., Ressa had been preparing for her upcoming seminar on press freedom at the University of the Philippines. “We’ll go to the NBI. It’s a shock—it’s a shock, but we’re going,” she said to cameras as the group pushed through a crowd of colleagues and reporters. Denied bail, Ressa spent the night in police custody.

The hours of forced reflection proved to be enlightening for Ressa. “When they did that they unshackled me, because I could see firsthand their abuse of power. I realized that I’m going to have to fight for my rights,” she told me. “I’m also a citizen … that’s asymmetrical power.”

It’s the kind of event that might inspire one to become a politician, to improve the system from within. But after 35 years covering Southeast Asia’s ruling elites, journalist and author Ressa has no political ambitions of her own. I broached the question well into our hour-long conversation hoping to unearth a fresh development in her career trajectory. Instead I got a modest laugh and a curt head shake. 

“I’m a journalist. And I think people forget that journalists originally fight power, they hold power to account. That’s always been the case,” Ressa told me. “So why did I become a journalist? And I’ve thought about this a lot—It’s because I care about justice.”

How have Ressa and Rappler ended up on Duterte’s bad side?

Rappler put names to the faces of those murdered by Duterte’s regime, intimately detailing the lives and families of people found dead in the streets beginning in 2016. This diligence and compassion, perhaps more than any other component of Rappler’s coverage, has attracted the unrelenting wrath of the president.

The state keeps its own logs of individuals killed during anti-drug operations, but most international organizations don’t take them at face value. The official record reports about 6,069 deaths between July 2016 and February 28, 2021. “However, Amnesty and other civil society organizations, believe these official figures are an inaccurate reflection of the true picture and that the true number of killings are in the tens of thousands,” a researcher at Amnesty International told The Dispatch.

A recent report by Dahas, an independent research body tracking Duterte’s drug war, found that at least 186 people were killed between January and March of this year. 

“People will care about the death of one person who they know much more than the deaths of thousands they don’t know. And that’s in our biology, that helps normalize the violence,” Ressa said of Rappler’s quest to humanize the masses. “When tens of thousands have been killed, silence is complicit.”

But silence is also a safer space to inhabit than candor: Duterte’s death threats aren’t reserved for the nation’s drug users. “Just because you’re a journalist you are not exempted from assassination,” the president said when asked about the Philippines’ disproportionate press death toll.

To combat such threats, Rappler instituted a series of intricate disaster plans attuned to every worst case-scenario. The staff of about 100 people—63 percent women and with a median age of 23—conducts frequent drills in preparation for various shutdowns and live threats. But even steps as simple as programming reporters’ phones to go live on social media with the touch of a button can offer protection. “You have no weapons. The only defense you have is to shine a light,” Ressa explained. “Courage comes from being prepared. It’s not a pill you take, it’s from knowing exactly what you’re facing.”

Worth Your Time

• Over at National Review, Jay Nordlinger has a very thoughtful piece about our increasingly all-consuming boycott culture and its effects. “I must say, I understand boycotters, on all sides. Sometimes you want to take a stand. You want to punish—or at least not contribute to the success of—people and companies you disdain (or that disdain you). … I understand a whole lot of boycotters. These are judgment calls, and very personal,” he writes. “But be careful: because politics can steal from you the things you love. One day, you aren’t watching football; the next day, you aren’t watching baseball. Politics can be such a thief: of pastimes, of friendships, of joy.”

• Democratic Sen. Joe Manchin has been adamant for months now that he will not vote to abolish the legislative filibuster, but reporters won’t stop asking him if he’s changed his mind. His op-ed in the Washington Post last night probably won’t stop the questions, but it does lay out his reasoning. “Every time the Senate voted to weaken the filibuster in the past decade, the political dysfunction and gridlock have grown more severe. … The truth is, my Democratic friends do not have all the answers and my Republican friends do not, either,” Manchin writes. “Legislating was never supposed to be easy. … Senate Democrats must avoid the temptation to abandon our Republican colleagues on important national issues. Republicans, however, have a responsibility to stop saying no, and participate in finding real compromise with Democrats.”

Presented Without Comment

Also Presented Without Comment

Toeing the Company Line

• On yesterday’s Dispatch Podcast, Sarah, Steve, Jonah, and David discussed President Biden’s infrastructure bill (and whether it is an infrastructure bill), increasing aggression from China and Russia, Major League Baseball’s corporate activism, and a recent 60 Minutes segment on Florida Gov. Ron DeSantis.

• Jonah’s Wednesday G-File (🔒) concerns our collective historical ignorance, and how it often leads to a misguided sense of urgency and ingratitude for what came before. “The fierce urgency of now denigrates the intelligent reformer—who wants to figure out why the fence was built in the first place—as a sellout, a moderate, or even (shudder) a conservative,” Jonah writes. “But he may agree to tear down the fence if there is a good reason to do so. This is why the fierce urgency of now is often better understood as the fierce arrogance of now: the invincible confidence that you don’t need to know anything more than what is already in your head—or heart—to take action.”

• In the 30th edition (!) of his Capitolism newsletter (🔒), Scott Lincicome takes a stroll down memory lane, revisiting some of the topics he wrote about in the summer and fall—the CDC’s eviction moratorium, tariffs and trade policy, and vaccines—to see where they currently stand. Maybe he pats himself on the back a little bit for some of his predictions ringing true, too. “Okay, fine, a lot.”

Let Us Know

What are your thoughts on political boycotts, and when they’re worthwhile? Apartheid in South Africa or segregated bus systems in Montgomery, Alabama are one thing, but quitting a brand of beans because their CEO was a Trump fan? Abandoning your favorite sport because the commissioner—foolishly or not—decided to move the location of an exhibition game?

Where do you draw your own line, if you have one?

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Haley Byrd Wilt (@byrdinator), Audrey Fahlberg (@FahlOutBerg), Charlotte Lawson (@charlotteUVA), Ryan Brown (@RyanP_Brown), and Steve Hayes (@stephenfhayes).