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Want to Cut the Deficit? Restore Fair Taxes on Corporations and the Wealthy
If the deficit hawks in Congress are serious about righting our economic ship and reducing deficits in the federal budget and many state capitols, it would we worth listening to the voices rising from the streets suggesting a very different solution than more cuts in safety net programs, education, pensions, and worker’s rights.![](/sites/commondreams.org/files/imce-images/greed-trust_1_0.jpg "Greed at the upper echelons of our society is bankrupting our governments at every level. "Suggesting corporations and the wealthiest Americans pay their fair share," writes Deborah Burger, "usually earns one the reproof of advocating class warfare. But class warfare when practiced by the elites is apparently perfectly acceptable. The average CEO who was paid $27 for every dollar earned by an employer 25 years ago – during which wages have mostly fallen or stagnated – now gets a ratio of about $275 to $1."")
Greed at the upper echelons of our society is bankrupting our governments at every level. "Suggesting corporations and the wealthiest Americans pay their fair share," writes Deborah Burger, "usually earns one the reproof of advocating class warfare. But class warfare when practiced by the elites is apparently perfectly acceptable. The average CEO who was paid $27 for every dollar earned by an employer 25 years ago – during which wages have mostly fallen or stagnated – now gets a ratio of about $275 to $1."
This is not a budget fight, it’s a fight for the future of an America in which everyone should be able to retire in dignity, not worry about whether they can go to the doctor when they get sick, or whether there will still be schools for their kids.
How will we pay for it? By increasing the revenues from those who can most afford it, not by punishing those who have the least. By requiring corporations and the wealthiest individuals to pay their fair share, and stop blaming working people for an economic crisis created by Wall Street and exploited by their politician acolytes.
We’ve all heard the arguments. Pass more corporate tax breaks because that’s what makes the economy grow. Except it doesn’t.
Corporate profits per employee are at record levels. At $1.6 trillion, third quarter 2009 corporate profits were the highest ever recorded. Yet official unemployment still hovers near 9 percent, and the real jobless number is probably double that. Whatever big corporations are doing with their record profits, they are not hiring more workers.
Or the argument that our 35 percent corporate tax rate is one of the highest in the world. Except few if any major corporations pay anywhere near that amount. Half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years from 1998 to 2005, according to a recent Government Accounting Office study.
How do they accomplish this? Pages of corporate tax loopholes that render the supposed tax rate meaningless, loopholes not available to the average working family.
Who are some of those tax scofflaws? Bank of America and Citigroup, two of the financial institutions that, unlike workers did actually create the financial meltdown, paid no taxes in 2009. Boeing, just awarded a new $35 billion contract by the federal government to build airplanes, also paid no taxes between 2008 and 2010 despite recording $10 billion in profits those year, reports Citizens for Tax Justice.
Where’s the shared sacrifice from these corporate giants? Not from General Electric which, as the New York Times reported March 24, made $14.2 billion in profits in 2010, but paid no U.S. taxes, and was rewarded with the appointment of their top executive to head President Obama’s Council on Jobs and Competitiveness. Apparently paying no taxes is a model for how to be competitive.
Then there’s the wealthiest Americans who won a two year extension on tax breaks in December and also profited from the near elimination of estate taxes, at a time when the richest 5 percent of Americans control 23 percent of total income, compared to just 12 percent for the 40 percent at the bottom.
According to Merrill Lynch Global Wealth Management and Capgemini Consulting, there were about 3 million high net worth individuals and ultra high net wealth individuals in the US in 2009, those with investable assets, excluding primary residences and consumables, of from $1 million to $30 million.
Calculations by the Institute for Health and Socio-Economic Policy, research arm of National Nurses United, shows that a one-time wealth surcharge of 14% on those assets would more than pay for the $1.6 trillion budget deficit projection for 2011. Or, it would support about 33.8 million households at the national real median income level for 2008, pay for a year’s worth of AIDS medication for about 142 million patients, or create 34 million jobs at $50,000 per year.
In other words, we could more than balance our federal and state budgets without cutting Social Security or slashing pensions for public servants or depriving students of access to a decent education or far too many Americans of access to healthcare.
Turn off the Fox News echo chamber and you can hear the sounds of those calling for economic justice and a more fair tax system every day in the streets of Madison, Columbus, Indianapolis, and other cities across America. They have opened a door that will not be closed, and their voices are getting louder.
26 Comments so far
Show AllGood plan, but a majority of the people who post on this site are already on that page. How to get elected official to do that is the question and, as yet, I haven't heard or read anything close to an answer.
Spread such articles around. The big elephant in the room on the question of deficit is the revenue side of the accounting. It's friggin' unbelievable how the "conservatives" have gotten away with this thing for so long without being challenged on something so damn elementary! All one had to do was to say, "Ok, you want to cut the deficit? Me too. So let's look at the revenue and expenditure and debate on the priorities"! That is all! And extend the debate to trade deficit (you know, imports - exports) and see how that comes about. It's easy to call the bluff of the conservatives by attacking their basic premise, one by one, on each issue, and to make them stand exposed with nothing but greed, selfishness, bigotry and violence to fall back on.
When you run into neocons who parrot the high corporate tax rate mantra, remind them that in 1970 corporations paid 29% of US income tax receipts, in 2009 they paid 6%.
Six months ago I would have told you that by 2020 corporations will pay zero % of US income tax receipts. In December, however, Obama announced his intention to "simplify the tax code in the spirit of Ronny Reagan's 1986 income tax reform".
Considering that Raygun's 1986 "reform" shifted record amounts of tax liability from corporations to you and I, it is a safe bet that corporations will pay no US income tax before 2020 rolls around if Obama gets his way.
Every tax dollar the government is not getting from corporations is another dollar the government needs to get from you and I.
sorry for the double post
That's because most of the voters would regard the drivel printed on this website as laughable.
I see that GE made billion$ in profits and paid not a dime in US taxes but actually took money out of our treasury. This is how the GOP 'bankrupt' our nation.
I am sorry but in order for any nation to reduce her deficit, two things have to happen mutually:
1. Everything this author has mentioned.
2. Cutting wasteful spending such as on wars, corporate bailouts and subsidies, and too many other "faith based" giveaways. Spending on social programs must be done and done properly. Nobody benefits by throwing money at the problem without improving the quality of the situation. If I want to fund public education, I would want to make sure that money goes towards education where it counts and not towards unrelated spending such as football stadiums.
Thank you, that is called accountability spending and controls for fraud and abuse. I am not an economist but I 've been wondering since our revenues are down so much maybe some of our spending of different programs seems so much higher against the totals?
Jujubaby, thank you for your response as well. I noticed that last year in other nations that I had visited. Spending used to be under some sensible control until Raygun ironically came into power.
P.S.: On most other "progressive" sites, I would get flamed or even banned for bringing this up. Since when was it "conservative" to question bad spending? They never get it.
Bush was handed a balanced budget. What did all those GOP deficit-hawks do next? They doubled the debt through tax cuts on the wealthy and corporations.
Did this stimulate the economy in any constructive way? (ponzi schemes = not constructive) Well, lets just say that along with doubling the debt, Bush doubled the unemployment rate. Two-thirds of Bush's economic gains went to the wealthiest 1% of Americans, who blew it on derivatives. Those derivative bets had to be covered, which the Fed will do cuz it owns the printing presses. This 'externalizes' a bad investment denominated in dollars. Should foreigners object? Well, now the American rich are busy lobbing missiles into Libya for daring to suggest the dollar isn't a good enough currency for their oil. (Saddam did likewise). Message delivered.
Capitalism, my a**, this is fascism, pure and loud.
All good comments, now how do we make the feds do it?
Well, there is the new Consumer Financial Protection Bureau, headed by Elizabeth Warren (remember her...she was the one person who testified before Congress in 2007 warning them of an inevitable financial meltdown---and nobody listened)! She recently met with many of the States Attorneys General to propose plans for getting back at least SOME of the money stolen by the Big Banks. I plan to do a lot of following up (with the aid of like-minded persons and Democratic Type Organizations)
with my California State Attorney General, Kamala Harris. There was a very good article in the 3/20/11 New York Times, by Paul Krugman, titled: THE WAR ON ELIZABETH WARREN, which I recommend. And there is to be a National "Call-In Day" on TUESDAY, MARCH 29th, for citizens of every state to call the office of their Attorney General with the following questions: WHO WILL YOU PROTECT, IN YOUR JOB AS ATTORNEY GENERAL OF name of state? WILL IT BE THE HOME-OWNERS, WHOM YOU HAVE SWORN TO PROTECT, OR WILL IT BE THE BIG BANKS THAT BROKE THE LAW, AND BANKRUPTED THE ECONOMY? I have Tue., the 29th, outlined in red on my calendar, and intend to call early in the morning! By the way, I am a 77 year old retired R.N., P.H.N. and School Nurse who has become politically active in just the last year. I see that it's never too late!
She misses the point on the deficit and taxes. She actually is a great example of the common liberal assumption that increased taxes on rich is an answer to all problems.
Money only comes into circulation as interest bearing debt. That means our current system will only be able to pay back old debts with more debt. At some point this house of cards will come crashing regardless of tax policy because you can never raise enough taxes without starving the money supply, which creates bankruptcy and depression.
Its clear that a select elite (which I think operates outside the false dicotomy of liberal/conservative right/left ect) avoids taxes and that is not fair. However, you can't deny that the tax burden isn't there and if you had more money you would either spend it into circulation and stimulate business or you would save it for future investment, both good things.
We need new theory, new system of money creation that does not ORIGINATE with debt. Interest bearing debt isn't a bad thing, but it should be used wisely and cannot be involved in the point of origin. We also need to find a good way to control the money supply to avoid hyper inflation. Gold lovers have a point that gold makes sure the money supply isn't destroyed by inflation. Inflation by the way is a tax on the poorest of the poor. Energy and food are the two things hit by inflation and that is what most poor people spend their money on.
Believe it or not, the right wing "conspiracy" guys and Ron Paul in congress are right about this one. The problem lies at the source... the root, the federal reserve.
I don't know about ALL of the above. But I DO know that on TUESDAY, 3/29, I will be calling my States' Attorney General, and adding: "You must choose a side and tell me whom you will protect"! And, I believe, there is a citizen's option for a recall, if enough people in a state are dissatisfied with the answer of one's elected official.
Its not as simple as cpotts18 portrays it.
The Federal Reserve is handing zero interest money to banksters and other elite. That money creates the maximum profits when it is used to speculate in an unregulated financial environment. Saving that money or investing in productive assets (that might actually produce jobs in the US) is much less profitable and the banksters and elite will not consider it.
You are absolutely right. The problem is complex. Its so complex that it's impossible to discuss with any kind of brevity.
I tried to explain it by pointing out the obvious but unspoken flaw. And yes they are giving free money to bankers. But that's because of the house of cards I described. The only way to cover losses on bad debts (which were the debt that help fuel the last boom) was to print more money into circulation because there wasn't enough money to pay off the debts.
The problem is DEBT. There is never enough money to pay it back. Interest payments are slavery in this system. And despite having all the resources and technology available to us to feed everyone in the world we somehow fall short. Artifical scarcity, thats how. The Fed enables that. And only Ron Paul is talking about it. If he won the primary I'd vote for him in a heartbeat over the warmongering, bankster serving Obama.
"If the deficit hawks in Congress are serious about righting our economic ship"
The politicians in Washing-town are serious only about maintaining the wealth divide, or the enslavement of the people by elites. The cycle is easy to recognize: After each step elites take in stealing another load of the people's wealth, the elites proceed to disassemble more of the people's institutions and infrastructure to burn in the kitchen to feed the people. The particulars of this mega-racket are mostly irrelevant, in comparison to the fact that the people fail to revolt against it. This is mainly because in parallel with this racket is the elites' non-stop shoveling of petro-opiates down the people's throats. Our role is not to determine our own destinies. It is to consume, consume, consume, to drive the flaming economy of the imperial juggernaut, with elite freaks at the helm. Soon, though, the people will get enough.
I find it quite perplexing that so many conservative politicians who purport to have business/fiscal savvy insist that the national deficit is solely the result of excessive spending, and that huge tax cuts for the ultra-wealthy and gaping corporate tax loopholes are irrelevant to this issue.
This would be akin to a CFO standing before the company's investors at a stockholders meeting, attempting to convince the crowd that the reason why the company has not turned a net profit during the current fiscal year has nothing whatsoever to do with the fact that revenues are down 50%, and that the red ink is solely the result of too much overhead.
The CFO would be pelted with moldy cabbages, so why aren't the Republicans who make the same inane statements reeking of rotten vegetation?
What we have is divided government bickering and one- up- man- ship with each other only distracting from the real issues. Can we not finally. before it is too late, Stand together as Just Americans for the survival of the country.
Our government is BROKEN. It cannot and will not fix itself. An uninformed and ignorant population will not be of any use. There may be one way back to sanity .As Frederick Douglas said Power concedes nothing without Demand. It never has and never will.. Please check out www.osixs.org and consider signing the petition for Declaration of Dissolution and Termination. Just an American
An analogy for a nurse: if a patient is dying from lack of blood, then obviously getting some new donor to donate would be helpful - as our countries suffer from lack of money, getting the wealthy to pay some taxes is fine, as far as it goes. But on the other end - if the patient is hemorrhaging blood faster and faster every day / year, then obviously just getting new donors is not really dealing with the problem. As one poster (cpotts18) notes above, the essential problem is really this - "..Money only comes into circulation as interest bearing debt...". The thing people need to be thinking about is *why* "our" money is created by private businesses, essentially out of thin air, as interest-bearing debt???? Money is a tool, and allowing private busineses to control this tool for their benefit is the root cause of ALL of our problems today. 1,000 words cannot explain everything - but there is more detail, including more places to read, here - What Happened? http://www.rudemacedon.ca/what-happened.html . (a Canadian context, but the same principles apply throughout the western faux-democracies (you cannot really have 'democracy' when your money is controlled by private interests...)
Another analogy for a nurse, such as the author of this article. You should spend more time emptying bedpans and less time giving us the contents in articles like this.
It is time to make 'hard decisions' as Republicans like to say in order to reduce our national debt....so social programs which we truly need to expand aren't on the chopping block...this must be done by making corporate plutocrats pay their fair share of taxes.
We are being railroaded by the RIGHT no matter what they call themselves: GOP/Tea Party.
The Tea Party of today is nothing like what happened in Boston Harbor so many years ago when tea was dumped into the water.
The Anerican Workforce has been targeted as scapegoats for what mess the GOP has gotten us into. Under the Clinton Administration we had a surplus of money. Once the GOP came into power that surplus was given away. The current President has no complicity in today's financial mess. In Congress they vote against everything positive for the country. We are under seige by the worst government in Washington and its about time to say no and stand up to those who want to destroy.
The GOP does not own this country nor the LEFT, it is one country under one government and we better get our act together,
This President is not the cause of all of our problems but by those who dislike the President for all of the wrong reasons and we citizens will not allow this to go unnoticed.
Wake up citizens and stand up to the GOP/TEA PARTY OCCURACY.
Make everyone pay 10% flat tax; corporation, millionaire, waitress, church. Kill all loopholes, tax-shelters, and tax evasion tactics.
If the company decides to doge this by operating overseas, increase the tariffs on imports. People will be able to handle increased price of goods due to their individual savings from their taxes.
Churches (especially the megachurches) which operate as businesses start paying their share of the load as well.
The only reasons for the tax code being so big is because it is made by lawyers and they want to protect their ability to make money...... the fact that most politicians are lawyers should not be lost on anyone.
We CITIZENS need to stop the CORPORATE RAPE of our country by initiating work stoppages in UNISON all across the country. Corporations are NEUTERED without their workers (for whom they have no real consideration) and it's time we citizens UNITE ALL ACROSS THE COUNTRY and create ONGOING STOPPAGES THAT PROVE TO THE WEALTHY that they are NOTHING without the average citizen-workers who are also entitled to their fair share of our country's wealth!!!!!!! What would they do - fire all of us????
Isn't it perfectly obvious by now that only by meaningful action (as demonstrated in Wisconsin) that directly affects the "bottom line" of the "corporacRATS" in a negative way by a majority us citizens will they ever be willing to admit that they cannot be "wealthy" without us!?!?!?
Ms. Burger,
Thank you for your lucid observations and recommendations for a fair and democratic solution of the financial dilemmas that seem to baffle most of our supposed "representatives" in state and federal government. They are simply pressing the manufactured panic button in order to push through a reprehensible ideology of greed and maintenance of privilege. In my vocabulary they are promoters of insatiable corporate welfare, corporate abuse, and profound hostility toward democracy. They are so vicious in their self-righteous anger and apparent delight in successfully promoting mean acts against the vulnerable children in poverty, abolishing school lunch program and such. For them the sense of community and the virtue of sharing are offensive claims against their undeserved astronomical incomes and too frequently ill-gotten gains. But, they would probably describe themselves as "real Americans" and worthy representatives of a "Christian civilization."