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Today's Top News
On Tax Day, Remember the Tax Dodgers
As you pony up to pay your taxes – or fill out forms to get back a portion of what Uncle Sam has already withheld from your paycheck – pause to contemplate how wealthy and corporate tax dodgers deal with Tax Day.
If you write a check over $10 to the IRS, then you just paid more than Verizon, Boeing, Bank of America, Citigroup and General Electric combined in federal taxes.
And you may have paid a higher percentage of your income than the billionaires who appear on the pages of the Forbes 400. As super-investor Warren Buffet has pointed out, he pays a lower actual tax rate than his secretary.
Business Week’s cover story this week is “The Billionaires Guide to Paying No Taxes.” Reporter Jessie Drucker declares, “the more you make, the less you pay.” For our nation’s millionaires and billionaires, “this could be the best tax day since the early 1930s.”
Don’t worry, we’re assured, these wealthy investors and global corporations are the great productive engines of the American economy. To tax them at all, we are told, would be to “kill jobs” and hurt the economy. In fact, we should pay them – like the $3.2 billion we taxpayers funneled to General Electric last year in various forms of tax breaks and subsidies.
Here’s the thing: If you gave me $3 billion – I would create jobs, too. Or if our society invested in green infrastructure and our small domestic U.S. business sector, we’d create even more jobs. But the key question is what kind of country do we want to be –and how will we pay for it together?
When we hear our governors and lawmakers lament that “we’re broke,” consider this fact: If corporations and households with $1 million income paid at the same levels they did in 1961, the Treasury would collect an additional $716 billion a year – or $7 trillion over a decade.
Our budgetary stress is the result of declining revenue, thanks to the economic downturn and decades of tax cuts. A new report that I co-authored, Unnecessary Austerity, argues that before we make draconian budget cuts at the federal and state level -- we should reverse huge tax cuts for the wealthy and tax dodging corporations.
If corporations and households with $1 million income paid at the same levels they did in 1961, the Treasury would collect an additional $716 billion a year – or $7 trillion over a decade.
There are two important explanations behind our current budget “squeeze.” First, income and wealth have become extremely concentrated in the hands of the super wealthy. The richest 1 percent of households own over 35.6 percent of all private wealth, approximately $20 trillion. The number of households with incomes exceeding $1 million has grown from 15,753 in 1961 to 361,000 today, adjusted for inflation. Meanwhile the middle class standard of living is collapsing and poverty rates are at a 15-year high.
Second, we’ve dramatically reduced taxes on these wealthy households and the global corporations they largely own. Congress and special interest lobbyists have made mincemeat of our tax code, losing hundreds of billions in revenue. A new study from Public Campaign shows that a dozen companies spent over $1 billion on lobbying Congress for subsidies and tax breaks.
That’s how a profitable company like General Electric legally and aggressively avoids taxes. Since 2006, General Electric has reported over $26 billion in profits, yet paid not one penny in U.S. taxes.
Other huge global companies such as Verizon, Boeing, ExxonMobil, and Federal Express also pay no or very low taxes.
In his new book Treasure Islands, journalist Nicholas Shaxson describes how these artful tax dodgers use accounting gymnastics to move money to overseas tax havens like the Cayman Islands or Ireland. They pretend to earn their profits offshore and then report their paper losses here in the United States—reducing or eliminating their U.S. taxes.
Our “Unnecessary Austerity” report identifies over $4 trillion in potential revenue over the next decade. Closing offshore tax havens could generate an estimated $100 billion a year. Adding new top tax brackets for millionaires could generate another $60-80 billion. Instituting a financial transaction tax could generate $150 billion a year.
Public opinion polls show that the majority of voters would rather hike taxes on millionaires and tax dodgers before budget cuts. But with Congress captured by corporate interests, it’s going to take a powerful movement to push back. The emerging US UNCUT movement is pressing the point: “No Budget Cuts before tax dodgers pay up.” There are over 100 actions planned for this tax weekend to underscore this point.
Without such a social movement, reasonable solutions will be drowned out by the drumbeat of “we’re broke.”