Corporations versus the climate

Climate change, corporations, and the I.R.A.

by Judd Legum Aug 1

“After innumerable stops and starts, Senators Joe Manchin (D-WV) and Chuck Schumer (D-NY) finally agreed on a legislative package, now called the “Inflation Reduction Act of 2022,” that would lower prescription drug costs, extend health insurance subsidies, and reduce carbon emissions. The bill, according to its proponents, would also reduce the federal deficit by $300 billion.

The climate provisions, while scaled back from what Democrats initially envisioned, are historic. The bill includes $369 billion in climate spending which “would represent the single biggest climate investment in U.S. history, by far.”

The climate provisions of the bill target the sectors of the economy that are the most carbon-intensive: transportation and electricity generation. For transportation, the bill provides tax credits to incentivize Americans to buy clean cars — up to $4,000 for a used vehicle and $7,500 for a new vehicle — through 2032. There are also billions in incentives to construct new manufacturing facilities (or retrofit older facilities) to produce zeroemissions vehicles in the United States. On electricity generation, the bill would provide “$30 billion in targeted grant and loan programs for states and electric utilities to accelerate the transition to clean electricity” and fund a “$27 billion clean energy technology accelerator to support the deployment of technologies to reduce emissions.”

These and other provisions would put the United States on a path to reduce carbon emissions by 40% below 2005 levels by 2030. That’s not quite enough to avoid the worst impacts of global warming. (The administration had been targeting a 50% reduction in previous iterations of the package.) But it’s a giant step in the right direction.

This legislation would provide critical support to car manufacturers like General Motors (GM), which has pledged to “completely phase out vehicles using internal combustion engines” and only produce electric vehicles by 2035. In November 2021, GM told Popular Information that it “supported the goals” of a more ambitious version of the bill. Specifically, GM said it “supports economy-wide efforts to address climate change including a drive toward an all-electric future that strengthens American jobs and enhances the well-being of American consumers.”

But GM did not respond to a request for comment about its position on the Inflation Reduction Act of 2022. Meanwhile, GM CEO Mary Barra is leading an effort to defeat the legislation.

In January 2022, Barra became the Chair of the Business Roundtable, a corporate lobbying group representing hundreds of America’s top CEOs. The Business Roundtable claims it is committed to addressing climate change. On its website, the Business Roundtable says it believes “corporations should lead by example [and] support sound public policies… needed to address climate change.” The group acknowledged the imperative of reducing carbon emissions by 45% by 2030 — an even more aggressive reduction than is contemplated by the latest agreement.

But shortly after the Inflation Reduction Act of 2022, the Business Roundtable, under Barra’s leadership, announced it “strongly opposes” the legislation. In a statement, the Business Roundtable did not even mention climate change. Instead, it focused on a provision that would help pay for the climate investments by requiring corporations with more than $1 billion in annual profits to pay a minimum tax rate of 15%. (The statutory tax rate on corporate profits is currently 21%.)

Business Roundtable @BizRoundtable

BRT strongly opposes tax proposals that would discourage investment in the U.S. We call on Congress to reject the proposed book minimum tax that would undermine proven bipartisan incentives that encourage capital investment.

July 29th 2022

3 Retweets1 Like

In 2020, 70 corporations reported over $1 billion in taxes but paid a statutory rate of less than 15%, according to a report by Senator Elizabeth Warren that was verified by the Institute on Taxation and Economic Policy. These corporations take advantage of various tax credits and deductions to drive their tax rates well below 15%. In 2020, GM reported $7.4 billion in profits but paid just $577 million in taxes, an effective tax rate of 7.8%.

Some corporations pay less than nothing. DISH Network, for example, reported $2.5 billion in profits in 2020 but received a $223 million rebate from the federal government, an effective tax rate of negative 8.7%.

The Business Roundtable also participated in a “significant, multifaceted campaign” to defeat previous versions of the climate legislation. It has produced television spots and spent hundreds of thousands on Facebook ads to kill the proposal.

The opposition by the Business Roundtable and other corporate groups is significant because passage of the Inflation Reduction Act of 2022 is not assured. The bill will get no Republican support in the Senate and needs the support of all 50 Democrats to pass. While Manchin is on board, Senator Krysten Sinema (D-AZ) has yet to endorse the legislation and is highly attuned to the views of the business community.

Apple’s tweets versus Apple’s actions

On September 20, 2021, Apple’s VP for Environment, Policy, and Social Initiatives, Lisa Jackson, called on Congress and the Biden administration to take “urgent action” to pass “climate policies that quickly decarbonize our electric grid.”

Lisa P. Jackson @lisapjackson

Our planet can’t wait. #climateweeknyc

September 20th 2021

27 Retweets165 Likes

Months later, Congress is close to approving the Inflation Reduction Act of 2022, which dramatically accelerates decarbonization. But Apple did not respond to Popular Information’s request for comment. Meanwhile, Apple CEO Tim Cook is a dues-paying member of the Business Roundtable, which is lobbying against the bill.

In 2009, when Steve Jobs was Apple’s CEO, the company quit the U.S. Chamber of Commerce (the Chamber) over the organization’s stance on climate change. At the time, the Chamber was lobbying against legislation that would create a cap-and-trade system to reduce carbon emissions.

“We would prefer the Chamber take a more progressive stance on this critical issue and play a constructive role in addressing the climate crisis,” the company said. “However, because the Chamber’s position differs so sharply with Apple’s, we have decided to resign our membership effective immediately.”

More than a decade later, the climate crisis is more acute, and immediate action is more critical. But, thus far, Apple is unwilling to take a stand.

The Chamber’s true colors

Since Apple’s departure in 2009, the Chamber has shifted its public stance on climate change. On its website, the Chamber now says “inaction is not an option” on climate change. Failure to act, according to the Chamber, will harm “the competitiveness of the U.S. economy.”

Last year, the Chamber said it opposed the climate package because it would increase the overall corporate tax rate, which it claimed would have a negative impact on small business:

Many assume that only big businesses will pay this higher rate. That couldn’t be farther from the truth. In fact, over a million small businesses—those “Mom-and-Pop” retailers, small manufacturers, and professional services firms that often suffered the worst during the pandemic—would also see their tax bills increase significantly. In turn, this would have a negative impact on small businesses’ investment and growth plans and, most critically, hiring and job creation.

There are 1.4 million small businesses (those with 500 employees or less) officially organized as C-Corporations, which means they would pay this higher rate. These small businesses employ almost 13 million American workers across various sectors.

The proposal announced last week, however, does not raise the overall corporate tax rate. The 15% minimum rate only impacts companies with more than $1 billion in profits — a category that does not include any small businesses.

But the Chamber still opposes the bill. In a statement, the group blasted the legislation for including “taxes that would discourage investment and undermine economic growth.” The Chamber did not mention climate change. Instead, it said the administration should “focus on unleashing American made energy,” a term frequently employed by the fossil fuel industry.

Major companies pay millions in dues to the Chamber to fund its lobbying efforts. Can companies that claim to take climate change seriously still be members of the Chamber? Microsoft declined to comment. Google, Walmart, Microsoft, Dell, Netflix, Nike, and Ford did not respond to a request for comment.

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