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Michael Hiltzik: Jeff Bezos likes Biden's infrastructure plan because he knows it's worth the money

Michael Hiltzik, Los Angeles Times on

Published in Business News

Broadband access today is necessary for daily life almost anywhere you live. Indeed, lack of access has been used to disadvantage low-income communities.

Arkansas, for instance, required residents subject to its work mandate for Medicaid eligibility on their reporting regularly via a state website. But fewer than 55% of all residents have access to broadband, and in some low-income counties the level is less than 10%. (This was one reason that a federal judge overturned the state's work rules.)

The U.S. lags many other developed countries in the average speed of its broadband access, and prices here are higher than in much of the rest of the developed world. Who says so? The Federal Communications Commission.

In a 2018 report, the FCC ranked the U.S. 10th out of 28 comparable countries in the average speed of its fixed broadband service, 24th in mobile download speeds, and 26th in the price of a broadband connection with a reasonable speed of at least 100 megabits per second.

The reason for this dismal record isn't hard to discern — it's because the U.S. government has ceded broadband development to private companies, which provide more-affluent neighborhoods with the best service and, since much of the country has only one or two competing providers, can effectively charge monopoly prices. A government investment to counteract this sort of rent-seeking by private enterprise is desperately needed.

Bezos knows that government infrastructure spending means money in Amazon's coffers. Better roads and other transport infrastructure reduce Amazon's cost to deliver merchandise to customers, and better broadband penetration means more customers for its online service. So he left open the question of what varieties of "infrastructure" he likes, and what he'd be happy to dispense with.

The remaining question is how to pay for Biden's program. With interest rates still hovering at historical lows, it would be cheaper for the government to fund the program through borrowing than at almost any time in the postwar period.

 

As for raising the corporate tax rate, America's CEOs might object, but let's recognize that for many big corporations the statutory corporate tax rate is merely theoretical.

As the Institute on Taxation and Economic Policy has documented, 55 major corporations paid zero income tax on their profits in 2020. Among them were several that are dependent on government-funded transportation and digital infrastructure, such as FedEx and Charter Communications.

These companies are well practiced at taking advantage of tax breaks and loopholes in the law. Amazon, for example, makes liberal use of deductions for stock-based compensation, which has saved the company more than $3 billion in taxes in just the last three years. Unspecified "tax credits" saved another $1.5 billion.

For decades, America has been shortchanged by politicians demanding austerity in government budgets by labeling "investment" as "spending." The deficit in the condition of the country's infrastructure has grown relentlessly.

Biden is right to demand that the trend be reversed. His critics maintain that his vision is too broad, too imaginative. But when you're mapping out the future, what's wrong with imagination?

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