Taxes and Davos

Another year, another Davos, another wildly divergent set of articles on what the super-rich have planned for the rest of us.

Consider the contrasting takes in two news stories today, one in The New York Times, the other in The Washington Post. The contrast is clear even before you read the stories, since they’re expressed in the headlines. “Ahead of Davos, even the 1% are worried about inequality,” reads the headline in the Post. Au contraire, says the Times headline: “Populism is Waning, Which is Reason to Party in Davos.”

Worried? Indifferent? Either way, the Davosites do agree on a common fact: Capital income has been soaring, while wage income has been lagging farther and farther behind. In the United States, that gap has just been pried wider by the GOP’s new tax law. As yet another story in today’s Times documents, the bonuses that Bank of America will pay its employees come to just 5 percent of the savings it will realize this year from the tax cuts. Apple’s bonuses to its workers will come to $300 million; its estimated tax savings this year on just one provision in the new law will come to $40 billion. An S&P Global report says that 75 percent of banks’ reduced taxes will be returned to shareholders through additional buybacks or higher dividends.

So if those Davos Men (and Women, of whom there are fewer) who are concerned about rising inequality are even remotely serious about narrowing the gap between themselves and everyone else, here are a couple ideas they might consider in the intervals between their deal-making and sybaritic pleasures: How about taxing capital at a higher rate than earned income? How about requiring worker representation on corporate boards, at a minimum of half the board seats? How about a new law setting aside a share of capital income to build worker-controlled organizations?

Of course, the Davos intervals between deal-making and sybaritic pleasures can only be measured nanoseconds. ~ HAROLD MEYERSON