why are we putting up with this?

Posted: March 21, 2013 in money in politics, politics, Republicans
Tags: , ,

Corporate welfare all reward no risk

I know you’re not supposed to shop while you’re hungry.  Or (as one congressman recently found out) tweet while you’re drunk.  You probably shouldn’t blog while you’re angry, either.  But here it is:

I don’t understand why more people aren’t pissed off about this.  In fact, I don’t understand why more people don’t even know about this.

Did you know that there are hundreds of wealthy, profitable corporations here in America that, because of the ridiculous number of tax breaks they’ve purchased from their friends on Capital Hill, pay no taxes at all?  In fact, many of them have negative tax rates, which means that they have bribed congressmen (and a few congresswomen) into giving them so many incredibly generous tax breaks that they actually make money when they file taxes!

This isn’t a joke.  Here are some examples of the corporations that “pay” negative taxes – I’m not even including here the corporations that pay no taxes at all:

Corporation & effective tax rate for 2008-2011

Pepco Holdings  -39.5%
General Electric  -18.9%
PG&E Corp.  -18.4%images-42  
Paccar  -13.0%
Boeing  -5.5%
Dupont  -3.4%
American Electric  -6.4%
Ryder Systems  -5.4%
Con-way  -5.4%
Verizon  -5.2%
Mattel  -0.9%
Honeywell  -0.7%
Wells Fargo  -1.4%
DuPont  -3.4%

Guess how much money this is costing us?
Had these companies paid the full 35 percent corporate tax rate over the 2008-11 period, they would have paid $78.3 billion more in federal income taxes. 

Wells Fargo alone garnered $21.6 billion in tax subsidies over the four years, followed by General Electric ($10.6 billion), Verizon ($7.7 billion), and Boeing ($6.0 billion).

These big, profitable corporations are continuing to shift their tax burden onto average Americans.  This isn’t fair to the rest of us, it makes no economic sense, and it’s part of the reason our government is running huge budget deficits.

-Citizens for Tax Justice director Bob McIntyre

images-41So, how do they get away with this?
Corporation A (we’ll call it We-Con) decides it doesn’t want to pay any more annoying taxes, so it hires a lobbyist (usually an ex-politician who knows the game) to convince Republican (usually) congressmen (usually) to give hefty tax breaks to their rich clients.  And how do they convince them?  Well, it’s basically a bribe.  “You give us huge tax breaks, and we’ll give a bunch of that money to the Super PAC that funds your campaign.”  (And how this isn’t seen by the Department of Justice as a bribe or a kickback, I don’t understand.)

So then, because keeping his job matters more to him that what’s best for the country, Mr. Congressmen sneaks a line item into an otherwise decent bill that gives We-Con a specific tax cut (or gives all corporations a specific tax cut).  Then (and this is the good part) your elected officials vote for that otherwise decent bill (which might even be a good tax reform of some sort), and they can say, “Yeah, well, that part that Mr. Congressman snuck in there really stank, for sure, but it’s a really good bill none-the-less, so I held my nose and voted for it.”  And like magic, We-con doesn’t have to pay taxes any more!  (And might even make money come tax season.)

And how do they continue to sell this system to the American people?  Lies, lies, lies.  The corporations line up their spokespeople, who include FOX News, most of the Republican party, and apparently a handful of my Facebook friends, and tell them really silly things, like:

If the rich get richer, we all benefit.

(Because we all know that when multimillionaires get an extra million dollars they immediately run out to Costco and get that big screen TV they’ve been saving up for!)

If corporations don’t have to pay taxes, they’ll use that money to hire more people.

(Unfortunately there is absolutely NO ONE CHECKING ON THIS.  There is zero accountability.  How do we know that We-con used that extra money – money that should have benefited all of us in roads, services, schools, research, infrastructure, lower taxes, etc. –  to hire more people?  How we know they didn’t use that extra money to outsource more jobs or give bigger bonuses to their top officers or line the pockets of their wealthy shareholders?  We don’t, because no one is holding these guys accountable.)

Of course, even while these Republicans are selling out to the corporations, they are cutting spending for safety nets, eliminating or reducing vital services to the poor, screwing military families, gutting health care, and more.

The Bottom Line
The Treasury Department reports that corporate taxes fell to only 1.2 percent of our gross domestic product over the past three fiscal years. That’s lower than at any time since the 1940s.

Getting rid of corporate tax subsidies that cause such widespread tax avoidance ought to be a key part of any deficit-reduction program.  As a bonus, revenue-raising corporate tax reform would make it much easier to fund the investments we need to improve education and repair our crumbling roads and bridges — things that would actually help businesses and our economy grow.  And, keep in mind that for every company that shows up as a low-tax corporation, there are competitors that are paying close to 35 percent.  The issue is about a number of privileged companies that have found ways to game the system and have a tax advantage over their competitors.

-Bob McIntyre

The solution?
Warren Buffet recently suggested a minimum tax rate for the wealthy.  Check out his New York Times Op Ed HERE.

Mr. Buffet believes that if such a law were passed, lobbyists would lose their power, and the bribery that goes on in the back rooms on Capital Hill would no longer be possible.  This would be good for America!  And of course this minimum tax rate should apply to EVERYONE – including corporations.  (Apparently, corporations are now people, so why not?)

And to those who worry that raising tax rates will incentivize the wealthy to stop making money (which is truly a stupid thing to believe), Mr. Buffet says:

SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”  Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.

What else can we do?
1.  Demand transparency.  Which congressmen are adding these line items?  Who are the lobbyists, who do they represent, and what specifically are the back room deals that are being made?  We should demand to see this information.  Write now corporate tax records are not public (because, of course, corporations are people).  These deals are being made in the dark.  This has to end.

2.  Punish the bastards.  Find out who is selling out America to the wealthy corporations, and make sure these guys do NOT get re-elected.  Vote for people who believe in the American dream enough to put the good of the country above their own self-interest.

3.  Spread the word.  Post this story and similar ones on-line.  Write to your congressmen and women – let them know that you know what’s going on, and demand change.  Talk about this at dinner.

4.  Don’t be gullible.  Be informed.  Get the facts.  Don’t serve as a PR representative for corporate America. Don’t believe what you hear on FOX News, or what the GOP spin machine is trying to sell you.  Remember, these guys want to keep their jobs – and the best way to ensure that is by selling their legislative power to the highest bidders, because then they’ll have enough money to sell themselves to us gullible Americans through campaign ads.

Comments
  1. Joni says:

    Don’t forget a lot of those tax breaks are made possible by massive contributions to non-profits! We like that. 🙂

    • nash says:

      Agreed…many, many corporations get tax breaks by giving to non-profits. But those tax breaks aren’t NEAR enough to get them all the way down to a negative tax rate.

  2. Anonymous says:

    I’d be fine with this if investment income was taxed at normal income rates

  3. Torger Helgeland says:

    good, thanks. torg

  4. Hassan says:

    Great question. It won’t. HIstory has shown clelray: corporations are like sociopathic people. They always make decisions based on their own gain, that’s it. The people making these decisions always act to expand and increase profits. The only rare exceptions are things where the people at the help active choose to consider humanitarian or ecological concerns but that’s the exception. If outsourcing saves money they will do it; you can cut their taxes down to zero it won’t change a thing. The only way to cause corporations to do anything, with regard to human rights, domestic job loss or the environment is to COMPEL them. That’s it. Otherwise they will slash and burn and destroy for their own gain, always. The people making these decisions wouldn’t be doing their jobs otherwise. It’s just how it is. Thanks for this question.

  5. I could watch Schindler’s List and still be happy after reading this.

  6. Thanks for spending time on the computer (writing) so others don’t have to.

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