[This commentary first appeared in the Oregon Capitol Chronicle]
Why is it that you are having to pay more for food and other goods at the checkout counter? Part of the reason may well be because, in the words of the CEO of the nation’s second-largest grocery chain, “a little bit of inflation is always good in our business.”
There’s good reason to believe large corporations are using the cover of inflation to further jack up prices and pad their profits. Shining the light on corporate profiteering is one of several reasons why Oregon should require large corporations to make public certain tax and financial information.
There’s little doubt that inflation is yet another symptom of the Covid pandemic. The pandemic disrupted global supply chains, reducing the amount of goods available. It also forced Americans to stay home during the lockdowns, leaving some families with more disposable income.
As a result, prices have risen faster than at any time over the past four decades, making life even harder for the lowest-paid Oregonians.
But that’s not the whole story.
There is strong evidence that large corporations are taking advantage of supply chain disruptions to juice profits. According to the Bureau of Economic Analysis, corporate profits are higher today than at any point since the late 1940s. The Guardian found that among the 100 largest U.S. companies, the median increase in profits was nearly 50% over the last two years. In Amazon’s case, profits more than tripled.
Then there are the admissions by corporate leaders themselves. Corporate CEOs – the same who grab millions in compensation packages – have been bragging to their shareholders about their ability to pass on costs to consumers.
In a recent earnings call to shareholders, executives at Kroger – which owns Fred Meyer, QFC, and many other grocery stores nationwide – said, “We’ve been very comfortable with our ability to pass on the increases.” Meanwhile, the company rewarded shareholders with more than $1.5 billion in stock buybacks and dividends during the pandemic.
Executives at Tyson Foods, one of the country’s largest suppliers of meat, were even more direct, telling investors, “We’re not asking customers or the consumer ultimately to pay for our inefficiencies. We’re asking them to pay for inflation.”
The blame for big business’s ability to profiteer in this way can be laid at the feet of decades of deregulation and market consolidation. Policymakers have looked the other way as companies consolidate market power. So when the pandemic disrupted global supply chains, large corporations were well positioned to exploit the moment.
Without a doubt, the problem of corporate profiteering requires federal action. Hopefully, it will add urgency to the need to strengthen anti-trust laws. It also seems appropriate to enact a surtax on large corporations to take away the gains from profiteering.
Oregon may not be able to, by itself, stamp out corporate profiteering, but it can play a role in exposing it. Oregon should shine a light on corporate behavior by enacting corporate tax transparency.
Corporate tax transparency would require large, publicly traded corporations to make certain state tax and financial information public. The main purpose of corporate tax transparency is to shine a light on how corporations avoid paying taxes, giving lawmakers and the public information needed to make Oregon’s corporate tax system more accountable and fair.
But it could also be beneficial when it comes to corporate profiteering. For one, it could provide more data on whether and to what extent companies engage in profiteering. This could allow state lawmakers to put in place policies to deter the practice, such as a state-level corporate income tax surcharge. Or it might prompt lawmakers to pull the plug on certain corporate tax breaks.
Just knowing their finances would be more public might deter corporations from trying to stick it to their customers.
They say that sunshine is a great disinfectant. Corporate tax transparency is the kind of disinfectant that may remedy more than one ill.