Gary Cohn on Biden's tax plan and US corporate tax rates

Gary Cohn, former president and CEO of Goldman Sachs and former White House National Economic Council Director: 'I think you have to get the corporate tax rate to a level that makes sense in the global tax landscape.'

Video Transcript

GARY COHN: You sort of almost have to go into this-- and I'm trying to be very sincere and very honest in here-- the year that we had in there is-- so '17 is the year we changed the tax plan.

- Yeah, that's an Obama legacy year.

GARY COHN: Right, well, I'm not saying it's Obama's legacy. I'm just being realistic. That was the old tax plan.

So '18 is the full year where we get the tax plan. So when you start looking at '18 and '19, you get real years of seeing what the stimulus of the tax plan looks like. And I think '20, everyone probably is going to agree, is a tough year to throw in the comparison, what's going on with the virus.

So if you look at sort of the 3% GDP growth, the 3% wage growth, the 3% unemployment numbers, you start looking at the three, three, three, those are pretty good numbers in there. And you started seeing disposable income go up, you started to see the economy grow. I think we achieved what we were trying to achieve.

- Your critics would point out when-- and this is pre-pandemic, though-- that the deficits, it came at a great cost. Deficits under President Trump started to go up and were projected to be 1.3 trillion a year till 2030. I realize Congress controls spending.

GARY COHN: Exactly.

- Never met a Republican or a Democrat who didn't like to spend more money.

GARY COHN: Exactly.

- But we wouldn't have 1.3 trillion a year if we had kept the old tax code. So have we-- have we-- mortgaged the future?

GARY COHN: How do-- how do you know that? I don't want to pick a fight with you. How do you know that? Because you just said--

- I'm using CBO numbers.

GARY COHN: Both sides like to spend money. So we never left the baseline spending in place. We actually added a lot of spending programs in there. So we never left the spending side of the equation in place.

When people talk about the deficit side, let's talk about the deficit side on the revenue side. So the place where I'm willing to defend-- 'cause this is the only side of the equation that I can defend-- is did we or did we not collect equal or more tax revenue? We collected equal or more tax revenue.

So then the question becomes did we spend more money or did we not spend more money? We did spend more money.

- When-- and this is the last on the Tax Reform Act. When critics point out-- and I think it was just "Washington Post" the other day, and Larry Summers as well-- point out that 20% of corporations with $100 million or more in profit don't pay any tax and that the average tax-- the real tax actually paid, now it's dropped to 21%, is around 12%-- the point being what good is a tax if people don't pay it? We didn't eliminate all the loopholes if it's a 12% rate in real-world.

GARY COHN: We eliminated a bunch of the loopholes. But look, again, let's compare to what it was prior. There were many corporations paying no tax under the prior tax law as well. We eliminated a lot of the loopholes. I'm not gonna sit here and say we eliminated all the loopholes. We still-- we eliminated many, many of the loopholes. We tried to get rid of as many as we could.

We still have a huge offshoring issue. You can create these IP boxes offshore and put your intellectual property and then license it back to your US subsidiary. We were doing a lot of work on that. We went as far as we thought we could go and get a tax bill passed.