American
citizens are paying an increasingly higher percentage of taxes as
effective corporate tax rates fall during a period of soaring profits.
The key word here is effective, as in taxes actually paid by
corporations to the federal treasury. (Advocates for cutting corporate
tax rates cite the official government levies, not what corporations
actually pay for the right to do business as US companies.)
What this means in plain English is that you and I are paying more to
the government, on a relative basis, than big business, a lot more.
Long-time friend of BuzzFlash, Pulitzer Prize winning economic reporter David Cay Johnston
explains how we are being hoodwinked
by the "America can only remain competitive with lower official
corporate tax code" arguments (made by DC politicians "rented" by
corporations, according to Johnston):
Individual income tax payments have been
rising fast since the economy began to recover, even though wages have
hardly budged. But
the same isn’t true for taxes for most corporations.
For the vast majority of America’s 5.8
million corporations, profits soared in 2010 — up 53 percent compared to
2009 — when the recession official ended at mid-year. Despite
skyrocketing profits, however, their corporate income tax bills actually
shrank by $1.9 billion, or 2.6 percent.
In an article in the National Memo entitled "Corporate Tax Rates Plummet As Profits Soar," Johnston elaborates:
The effective tax rate paid by 99.95
percent of companies fell to 15.9 percent in the robustly profitable
year of 2010, from 24.9 percent in the half-recession year 2009.
Those figures do not count the 2,772
companies that dominate the American economy. These giant firms, with an
average of $23 billion in assets, own 81 percent of all business assets
in America.
Their combined profits soared 45.2 percent
to a new record in 2010, but their taxes rose just 14.8 percent, new
IRS data show. Profits growing three times faster than taxes means their
effective tax rates fell.
In 2010 these corporate giants paid just
16.7 percent of their profits in taxes, down from 21.1 percent in 2009.
The official tax rate is 35 percent.
The Washington Chamber of Commerce meme is that corporations are
being kept from helping to expand the US economy by high taxes that make
them non-competitive in the world market. However, the stock market
continues to flirt with record highs because big businesses are making
big profits, distributing them to shareholders and in the form of
executive compensation. The excess profits are generally not being
spent to expand plants or staff in the US because individual Americans
-- squeezed between relatively stagnant wages (adjusted for inflation)
and an increasing percentage of the tax burden (as compared to
companies) -- can't afford to increase consumption. So the Chamber of
Commerce meme is malarkey.
Many of the largest corporations sit on their profits (Apple being a
prime example of this) or throw a bone of investment to the American
economy for public relations purposes.
US corporations, in general, don't need lower tax rates; they need to
pay higher actual taxes given that the biggest of them don't pay
anywhere near their IRS codified tax percentage.
Johnston is not optimistic that the burden will start shifting from
individual citizens to big business anytime soon. As he writes in his
recent article:
Going forward, the Obama administration
predicts that Washington will rely more on individual income taxes and
less on corporate taxes.
Between fiscal 2010 and fiscal 2018,
individual income taxes will rise from 41.5 percent of federal revenues
to 49.8 percent, an increase of 8.3 percentage points, the president’s
proposed fiscal 2014 budget shows. Corporate income taxes – assuming
current statutory rates – are expected to grow by only 2.4 percentage
points from 8.9 percent in 2010 to 11.3 percent of federal revenues in
2018.
What this amounts to is corporations, as a result of their bought and
paid for elected officials in DC, are skimming from the Sunday donation
plate as others put in their hard-earned dollars to pay the price for
the infrastructure that allows US-based corporations to flourish.
It is vital to never forget one important fact. Although, the
mainstream corporate media covers the economy as if it were one
monolithic force, it is not.
The rich are richer than ever now. Their economy is growing more
gluttonous by leaps and bounds as the working and middle class, in
essence, subsidize them with tax loopholes.
Johnston explains the revolving door and politician for rent game in DC:
Those rents – er, donations and perks –
also ensure that those appointed to regulatory agency boards do well
after they leave office, provided they have been good servants to
corporate interests. Tricks like
making customers pay
taxes to monopolies that are exempt from the corporate income tax are
one way that those appointed to regulatory boards will do well when they
leave the government payroll, as my book
The Fine Print revealed.
The corporate giants quietly lobby for laws and regulatory rules that get little to no attention in the mainstream news.
GE spent $39.3 million just on Washington lobbying in 2010, more than $73,000 per senator and representative.
ExxonMobil has spent on average almost $23
million annually lobbying Washington in 2008 through 2010. Walmart has
spent between $6.2 million and $7.8 million lobbying Washington each
year since 2008.
Lobbyists for these and other corporations
have lawmakers on speed dial. As for you, just try to get a
face-to-face appointment with your senator or representative.
Many years ago, the late US Senator Paul Simon (D-Illinois) announced
that he was not going to run again. I was with him at an event and
asked him why he had decided not to seek another term. His answer was
telling.
"Mark," he said (to the best of my memory), "I spend 70% of my time
fundraising and 30% of my time legislating. There's nothing I can do.
You get elected to a six-year term and immediately your staff has you
fundraising for the next election. If some interest gives my campaign
$20,000, my staff is going to make sure I answer if they call. If a guy
in a union with a lunchbucket calls, he'll get routed to an intern.
I've tried to change that, but it just seems to end up returning to the
fundraising scramble and attention to the big givers. I'm just sick of
the little guy or woman not being able to get through to me."
Simon was the last of a generation and retired with dignity. (He died in 2003.)
Now you can probably count on one hand the number of senators who don't wear a "for rent" sign on them.
And corporations continue to see their effective percentage of tax liability shrink as we continue to see ours rise.
John McCaffery, TSA, said, “No, those vehicles that are in the garage,
short term long term parking, even if they carry pretty large amounts of
explosives, they would not cause damage to the front of the airport.
But for those who use the valet, the car could be there for a half hour
or an hour so there is a vulnerability.”
When
bad smells from flatulent demons were ruining his business, who
Romanian lawyer Madalin Ciculescu gonna call? The ghostbusters - his
local Orthodox bishop and priests - to do an exorcism, of course!
