This documentary makes the argument that U.S. corporations are not paying their fair share of taxes and that their failure is a major part of the reason we have a substantial deficit. It goes on to argue that higher corporate tax payments (not necessarily higher rates), as well as higher taxes on the wealthiest Americans, need to be a major portion of the package of actions to reduce our deficit. Some speakers in the film go so far as to suggest that higher corporate tax rates alone might be sufficient to address the deficit issue in its entirety.

I believe that the argument about excessive corporate tax loopholes and tax havens certainly bears scrutiny and should be more seriously studied by Congress. In the United States we might be wise to lower nominal corporate tax rates and, concomitantly, close off certain deductions and loopholes, with the overall impact of raising the effective tax rates of U.S. corporations. To the extent the movie draws attention to this issue, I think it provides a contribution to the national discussion.

My main disappointment with the movie was not that it wasn’t well made or that it didn’t clearly articulate its argument; it did all this very well. My main issue with the movie is that its argument is incomplete. It focuses too heavily on raising taxes as the solution to the nation’s deficit problem. Tax revenues are only a part of the puzzle. There’s no getting around the fact that, if we are to seriously reduce our deficit, we also need a package of entitlement reforms/restructurings, non-entitlement spending cuts and other painful sacrifices. In addition, we also need to explore policies that foster growth. Examples of growth initiatives could be infrastructure spending as well as overall tax reform.

Corporations certainly take advantage of our tax laws. The film’s explanation of transfer pricing is an excellent case in point. But, as fiduciaries, it isn’t surprising that corporations push their advantages to the extent that the law allows. The movie identifies specific companies and other actors it paints as the worst offenders. I do wish that it would be as easy as rounding up all the “bad actors”, beating the hell out of them, and creating greater tax fairness. Unfortunately, again, it’s not so simple. First, these corporate behaviors, for the most part, are consistent with current tax laws. And second, we have a huge deficit because we have gotten used to outspending our revenues, increasing tax expenditures, and making promises to future generations we can’t keep. It also doesn’t help that, since 2000, we have fought two wars and had two substantial tax cuts, both of which have had a profound negative impact on the nation’s finances.

While it’s true that we’re not broke, it’s also true to say that our political system is “broke” in terms of being able to address the issues we face. The movie might have been more persuasive if it spent less time on the specifics of tax avoidance and more time on the corporate lobbying efforts that make very edgy behavior, like transfer pricing, technically legal. It also would have been more persuasive if it admitted that, in addition to needing more revenues, we are also spending beyond our means. Both elements need to be part of the discussion if we are to come to a national consensus regarding additional tax revenues from individuals and corporations. All of the elements of spending and taxes—not just one—must be addressed if we are to regain our fiscal health. Of course, to do this, we need leadership in Washington that can explain the reality of the current situation and propose a balanced approach to addressing it. All elements must be on the table.

Doing the math helps make it clear that higher taxes alone won’t do the trick. Spending cuts alone also won’t do the trick. More than all this, we need political leadership that is willing to debate, disagree and then compromise for the good of the nation. I would have liked to see the movie talk more about these various problems and exude a tone which talked about the need for compromise on all sides. It raises issues regarding only one key element of a potential package, and it propounds the equivalent of a devil theory as to how to deal with it. It misses an opportunity to gore everyone’s ox; that is, to argue for a broad, responsible effort to attack all elements of the deficit issue.

The good guys/bad guys approach is also broadly misleading in another way. The truth is that the interests of the middle class and those of corporations are really not in opposition to each other. In fact, whatever may be said about the need for more job growth in the United States, middle-class jobs are mainly created by companies. Most Americans proudly identify with their employers. The stocks of corporations are widely owned by a significant percentage of Americans in their pension funds and retirement accounts. It will be tough to grow and build the middle class without a healthy corporate sector in the United States. I would love to see more movies that cut through the rhetoric and emphasize that we must come together as nation if we are to solve our significant problems.

We’re not broke, true, but we’re going to be broke if we don’t come together to work through these challenges. Whether we realize it or not, all the citizens of this country are ultimately in the same boat. It is time for our elected officials to act accordingly. Now that the election is over, these officials have a new chance to do the right thing. Let’s all urge them to do so.