Monopolists and rentseekers have been running rings round the democratic fiscal state for decades. It is obvious to everyone that the game is rigged. But we still have a few more rolls of the dice. Let’s use them wisely.
For decades the United States’ tax system has favoured large corporates over locally embedded and competitive firms. The resulting social and economic costs of monopoly are artefacts of the political process and can be reversed by government action.
Corporate income tax in the United States was originally introduced as an antitrust measure. A steeply progressive version of the same tax would reduce the economic and political power of monopolists and reintroduce competition in an economy increasingly burdened by rent extraction.
For too long policymakers have failed to distinguish between productive profits and rents derived from market concentration and the control of scarce resources. A revived anti-monopoly movement must make full use of this difference to ensure that taxes encourage investment while eliminating rent-extraction as a business model.
As some companies reap outsize profits while consumers struggle to keep pace with inflation following the pandemic and Russia’s aggression against Ukraine, lawmakers around the world have been considering whether and how to respond.
Concentrated control of large corporations has created vast fortunes over the last four decades and fueled the drive towards market domination. Niko Lusiani and Emily DiVito consider how the tax system could be used to shift incentives and broaden ownership beyond a handful of latterday robber barons.
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