Bernie Sanders’ new Corporate Accountability and Democracy plan would close corporate tax loopholes and tilt power in favor of workers, advocates say, while opponents argue it’s potentially unconstitutional.
But that’s exactly his point.
Sanders has always said he’s leading a democratic socialist revolution, and that his plans will only work if Americans who share his views are elected across the board of federal, state and local governments. If his plans are unconstitutional, that’s because he’s advocating for an entire re-shaping of America.
Sanders’ latest plan attacks what he considers the root of corporate corruption: unequal economic power driven by greed.
“The time has come to tell corporate CEOs and their wealthy stockholders … Your greed has got to end,” he said. “The truth is that we can and we must develop new economic models to create jobs and increase wages and productivity across America. Instead of giving huge tax breaks to large corporations that ship our jobs to China and other low-wage countries, we need to give workers an ownership stake in the companies they work for, a say in the decision-making process that impacts their lives, and a fair share of the profits that their work makes possible in the first place.”
The notable points in his plan include:
- All publicly-traded companies, and private companies with at least $100 million in revenue, must be at least 20 percent owned by their employees;
- 45 percent of the board of directors at these companies must be directly elected by the company’s workers;
- A ban on stock buybacks;
- Companies that lay off workers to move operations overseas must share some of the “gains” with the laid-off American workers;
- Company boards will be required to maintain representation from “historically marginalized groups” (like women, LGBTQ individuals, African-Americans and others) and submit reports on the racial and sexual orientation makeup of their boards and employees to the federal government;
- A ban on mandatory arbitration and non-compete clauses;
- And the elimination of offshore tax havens and a corporate tax rate hike from 21 to 35 percent.
According to the Sanders campaign estimates, under his plan Amazon would have paid $3.8 billion in taxes last year.
Ralph Sonenshine, assistant professor of economics at American University, thinks Sanders’ plan will “create a lot of inefficiencies and black markets where companies try to get around [his policies].”
“As somebody that supports a lot of Democratic agenda items, most of this would not be one of them,” he told InsideSources. “I don’t believe in forcing corporations to do certain things, like banning stock buybacks, I think that’s not good at all.”
Sonenshine thinks Sanders could fix a lot of the economic inequalities he discusses with existing reform ideas that both progressives, neoliberals and conservatives agree on, like campaign finance reform, or minimum wage laws, which progressives and neoliberals (but not conservatives) generally agree on.
“One thing that’s not on here is campaign contribution limits,” Sonenshine said. “We used to have that, and we don’t anymore, so right away, that would limit the influence that wealthy people have on how the country gets run. I think there are things that can be done that enable corporations to still do what they do best, which is to run their business as they see fit. And have safety nets for employees like the minimum wage. So I think you can accomplish a lot [with that].”
Sonenshine, like many conservatives, thinks mandatory arbitration and non-compete clauses are bad, but also said he isn’t sure Sanders would be legally allowed to ban them if he were president.
“I don’t even know if that’s constitutional,” he said.
Conservatives and progressives alike often talk about closing tax loopholes to ensure a fairer, more just tax system. Sonenshine and Lawrence White, a professor of economics at New York University’s Leonard N. Stern School of Business who describes himself as “markets-oriented,” approve of eliminating offshore tax havens and raising the corporate tax rate a little bit — not quite to 35 percent, but maybe around 25 percent, they said.
“As far as profit-sharing arrangements, I think that’s a mistake,” White said. “I know it works in Germany, I’m less convinced it would work here. We had experiments with worker shareholding arrangements, one of the major airlines had this 15 or 20 years ago. It didn’t work very well. It creates this sort of extra level of bureaucracy … and it’s unclear exactly what claims the workers have, suppose they leave and go somewhere else? What claim do they have on the shares that were theirs while they were working but now they’re somewhere else? This just seems like extra complications, extra bureaucracy, I just don’t think it’s a good way to go.”
White also thinks income distribution problems could be addressed by expanding the earned income tax credit, reforming housing policy, and retraining workers to allow greater career flexibility and enable workers to move more easily from low-paying to higher-paying jobs.
“We do have a problem that the small percentage of the U.S. population has been getting larger and larger share of overall income and the bottom percentage has been getting less,” he said. “Housing is a terrific barrier to movement right now, because we’ve got restrictive zoning in places like California and places around New York that make it difficult to build multifamily housing and get more houses built on smaller lots.”
But Sanders believes the only way to ensure upward mobility for low-income workers and families is to give economic power back to them.
“Workers who sit on corporate boards will not vote to pay themselves poverty wages or ship their own jobs to low-wage countries to further enrich overpaid CEOs and a few wealthy stockholders,” he said.
