September 7, 2018

Amazon, Sanders, and the Socialist Family Feud

The Stop BEZOS (Stop Bad Employers by Zeroing Out Subsidies) Act is class warfare.

On Tuesday of this week, Amazon joined Apple as the only other company with a $1 trillion valuation. Other corporations moving in to join the list include Microsoft and Alphabet (which owns Google). On the subject of giant corporations, we’re told that while their CEOs draw multimillion-dollar annual salaries, many of their employees hover just above the poverty line. But is this true? And if so, what should be done?

Most Americans likely agree that workers deserve a fair wage, and that CEOs like Amazon’s billionaire socialist Jeff Bezos (owner of The Washington Post) are paid too much money, but in a free-market system the wages and salaries of workers are determined by the value of labor within the system, not by bureaucrats or polls. And this prompts the question: Should the federal government force companies to pay higher wages?

Bernie Sanders, the socialist senator from Vermont, thinks so. And he’s got an even bolder plan. Along with Rep. Ro Khanna (D-CA), Sanders has drafted a bill called the Stop BEZOS (Stop Bad Employers by Zeroing Out Subsidies) Act, which would tax large corporations at a rate equal to the amount of federal benefits their employees receive from the government.

(Did we mention that Sanders owns three homes, including a $600,000 lake house?)

Sanders relies on bogus research that, as Investor’s Business Daily notes, lumps in with regular workers “those putting in as little as 10 hours a week, 27 weeks of the year. It’s hardly surprising that some of these part-time, transient workers rely on government benefits, but that’s not Amazon’s fault.”

Emily Stewart writes at Vox, “How the Sanders/Khanna legislation would be implemented is not clear. Sanders’s office says that the IRS would have to consult with the United States Department of Agriculture, Department of Housing and Urban Development, and the Centers for Medicare and Medicaid Services to issue regulations to make it work. They haven’t offered more specifics.” No surprise there. The devil is always in the details.

And don’t think for a second that if this bill ever becomes law it would be the last stage in the process. Imagine if Democrats had the power to nationalize health care again or guarantee other government services for every citizen. Corporations would then be forced to cover the social costs of all their workers, not just those at the lower end of the economic ladder.

But this plan is pure political theater to motivate the Democrat base in the midterms. After all, a recent poll revealed that they now prefer socialism to capitalism. And if Democrats take back Congress in November, look for a bill like this to come up for a vote.

Sanders’s proposal to tax corporations is yet another “feel good” progressive solution that solves nothing.

In fact, it causes other problems that we’re already seeing in certain industries. One of the side effects of the Stop BEZOS proposal includes companies replacing workers with automation or raising consumer prices in order to pay for the tax. They may also be more likely to find loopholes in order to avoid the taxes. And since there are plenty of middle-class Americans who receive government assistance in one form or another, companies may be hesitant to hire low-income workers in the first place. This is the slippery slope of socialism trying to ride on the back of capitalism, and it ends up hurting workers and consumers every time.

As for the notion raised by some on both the Left and the populist Right that we’re already subsidizing employees of these companies, the American Enterprise Institute’s Michael R. Strain writes, “Walmart, Amazon and McDonald’s are not being subsidized by taxpayers because some of their employees receive assistance from safety-net programs. Instead, employers of lower-wage workers are surely reducing safety-net rolls.”

Nonetheless, Democrats are portraying this issue as the rich taking from the poor. And this, of course, is their go-to strategy for mobilizing working-class and poorer voters to support various progressive schemes. But the reality is far more complex, and the government is simply not capable of replicating the value of work in a free-market system.

The Stop BEZOS Act is only the first step, but instead of penalizing corporations, we need to focus on the root causes of wage stagnation and poverty. We should be looking to expand the economy and raise wages through free-market solutions rather than oppressive taxation. Doing so can help us ensure that fewer of our fellow Americans will need a social safety net in the first place.

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