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Obama Administration Plans Corporate Tax Cut In Year Of Record Profits
As nationwide budget protests continue this week, Treasury Secretary Timothy Geithner is prepared to unveil the Obama administration’s plan to lower the top corporate tax rate from the current 35 percent to less than 30 percent, and as low as 26 percent.
In order to pay for the cuts, the proposal calls for closing loopholes and slashing exemptions. Politico reports that Geithner has already begun meeting privately with CEOs, academics, labor unions, and liberal and conservative think tanks, and his aides say he is “encouraged by the response.”
Part of that optimism stems from the fact that Democrats and Republicans are both allies of the business world.
One top business lobbyist, speaking on condition of anonymity, said corporate tax reform should be “the easiest piece” of a complex fiscal bargain “because you have people in both parties in the business community.”
Meanwhile, the number of people who filed new applications for jobless benefits leaped 43,000 last week to 474,000, the highest level in almost nine months.
The surge in unemployment comes at a time when U.S. corporations are more profitable than ever. The end of 2010 saw some of the biggest gains in the business world, according to data from the federal Bureau of Economic Analysis. Corporations reported an annualized profit of $1.68 trillion in the fourth quarter, up from the previous record of $1.65 trillion in the third quarter of 2006.
In the first quarter of 2011, Exxon-Mobil, the world’s biggest and most profitable corporation, raked in $10.7 billion. That’s a 69 percent increase over the same quarter last year, and the highest quarterly profit since 2008. This is happening during a time when citizens are searching underneath the couch cushions to scrape together enough change in order to fill their gas tanks so they can go file for unemployment benefits.
Exxon also happens to be one of US Uncut’s top targets. The oil giant uses offshore subsidiaries in the Caribbean to avoid paying taxes in the United States. The company paid zero U.S. income tax in 2009, while enjoying billions in taxpayer-funded subsidies and its CEO’s total compensation reached over $29 million.
Now, in addition to raking in record profits by sheltering revenue in foreign tax havens, Exxon and its Fortune 500 comrades, rest on the brink of enjoying more sweeteners in the form of tax breaks.
Of course, tax havens are only one part of a rigged system that allows corporations to make bank during economic recession. There are also the practices of government subsidies, (read: taxpayer subsidies) outsourcing jobs, and buying off politicians that allow top corporations and their CEOs to flourish while one in four American children survives on food stamps.
While I was watching CNN this morning, a talking head made the comment that the corporations were forced to “go lean” during the recession, but now that the economy is recovering, they refuse to hire simply because they like being lean! Why wouldn’t they? Corporate America is enjoying record profits, so there are no incentives to hire an expensive American worker (with their pesky unions’ minimum wage demands, rational work schedule, and health benefits) when they can outsource the same job for cheap labor overseas.
Another alternative is to just bust unions and treat workers like they’re employed in the third world, a path chosen by Wal-mart, which secured a spot at the top of the Fortune 500 list released today.
Then there’s the problem of corporate lobbying and bribery. Corporate America dominated Washington’s lobbying spending in the first quarter of 2011, according to a report from the Center for Responsive Politics. The US Chamber of Commerce spent just over $17 million in the three-month period. Next was General Electric (the “King of Tax Dodgers”) with just over $9 million, and AT&T with spending just over $6.8 million.
Corporations learn to grease the wheels early, which is why their financial support of political candidates is so bipartisan. Before the presidential election, John McCain received three times more money from the oil industry than President Obama. However, Obama received more in campaign cash than McCain from the employees of some of the biggest oil companies: Exxon, Chevron, and BP, three companies that routinely grace the top echelons of the Fortune 500 list.
It’s no wonder that the big companies with the most money buy the most access and win the most favorable pieces of legislation.
The Obama administration is considering these corporate tax cuts during a time when almost every state is experiencing some kind of budget cut protest. Teachers, police, fire-fighters, unions, students, and their supporters have occupied state Capitols and campuses to demand a one-tier America where everyone (citizens and corporations, alike) sacrifice during times of fiscal crisis.
16 Comments so far
Show AllThank you for writing an article about who really isn't paying their "fair" share.
Not only do corporate tax breaks result in them NOT hiring more Americans, corporations use the money they save on taxes to speculate on commodities, thereby inflating food and energy costs, and they use the money to hire more lobbyists to assure that more pro-corporate, anti-worker legislation makes it through Congress and is signed into law by President Obama.
I will not vote for Obama again and I think millions will not either. I hope his corporate sponsors have another job for him. I pray that the Democratic Party will offer an alternative to this manipulative, obfuscating corporatist in the primary so that I can vote for someone else.
I wish you were right. I bet he get's re-elected.
Anyway, only a fool would put ANY faith in the Democratic Party.
What makes you think another Dem would be any different? In any case, if there were going to be a primary opponent, you'd know about it by now.
The Green Party will offer you a REAL alternative, if you've got the spine. And no, I don't know yet who it'll be. Our nomination process is only just starting, too.
Vote Green, elect a corporate-militarist Democrat or Republican. Won't change a thing.
Hello SteppingRazor,
I hope your prayer works but I think that you will be disappointed. The corruption runs deep and the Dumbocratic/Demoncratic Party will not be of any help. If you decide to vote for someone else the machinery that counts your vote will provide whatever it is programmed to give for a result completely disregarding any of our votes.
Why should Americon multinationals they get the same tax treatment as small businesses?
Let's face it. We've reached a point of no return in this country, which is now officially the U.S. of Corporate America. Being a senior citizen, though still healthy, statistically I might be able to leave this world before the greedy corporatists impoverish ninety percent of its population and destroy most of its environment. My concern is for younger generations who face a bleak future unless drastic action is taken to stop self-serving, amoral lobbyists and politicians from manipulating the system for their monetary benefit, plundering earth's assets, and leaving the ruins for succeeding generations.
Obama's first mistake was to name Wall Street allies Geitner and
Summers to his economic council, apparently believing he had to rely on financial "experts" to guide him in economic matters, whereas he'd have been better off using his own good judgment. Obama now needs to stop yielding to corporate lobbyists and greed-driven Republicans. First on his agenda should be to repeal Bush's tax breaks for the wealthiest Americans and to stop billions in oil subsidies for oil companies making record profits and paying no income taxes. Forget the 2012 campaign, President Obama. Do the right thing for the majority of Americans and cut the line that tethers you to corporations.
I'm afraid it's already too late for O to forget about the 2012 campaign, that's the only thing he has worked diligently on since he got elected. He spent 2 years running the last time and he is going to spend 4 years running this time; and if he forgets the corporations how can he possibly raise his $1 billion?
As an old-timer myself, I'm really tired of voting for losers who unfortunately sometimes win.
We watch the Middle East victims of dictators rising up to demand democracy. We know by experience, that the dictators will be replaced by the corporate tyrants or puppets of the corporate giants. But many Americans think they live in a free country in spite of the lies that have been exposed to the public regarding the reason for multiple, endless wars against dirt poor third world nations. And lies about the social net and unions causing the deficit.
Ask the many people of Iraq who after years of "democratic" elected government do not have adequate clean water, electricity, stability, or jobs. They do have internal refugees and external refugees suffering the misery and hardship of being displaced without their democratic government in oil rich Iraq improving their life. Instead their situation is getting worse.
Greedy military and U.S. corporate power and corporate foreigners with the help of apathetic citizens and the religious right wing fundamentalist are chipping away our freedom while they wave the flag in our global faces.
Ms Kilkenny, I do hope you're on a first name basis with Keith Olbermann! If not look him up on Twitter.
Why should the Gov give give any benefits, tax breaks, subsidies to America based multinationals at all? They're not providing American jobs or investing in America.
Why should our government not impose tariffs on imported American multinational's products like it does with imported products of multinationals based in other countries? What's the difference? How can multinationals be patriotic and care about a country of origin when all they are legally able to care about is their bottom line?
Why should the Supremes allow major foreign stockholders of America based multinationals to fund our political candidates through the corporation itself?
By allowing wealthy foreigners to fund American politicians through their Citizen's United ruling, aren't the Supremes committing treason, sedition and perpetrating a fraud on the American people?