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Don’t Lower the Corporate Tax Rate
Republicans love to talk about how high the U.S. corporate tax rate is, and how bad that is.
But when you examine their arguments, their case falls apart.
They predicate it on the fact that the current tax rate is 35 percent. But because of creative accounting and loophole sneaking, the actual rate that corporations paid last year was just 12.1 percent.
Many of our biggest companies paid nothing in corporate taxes, or even got rebates.
Take GE, for example. In the last decade, it made $81 billion in profits but paid only 2.3 percent in corporate income taxes. And over the last five years, it got $2.7 billion in rebates.
So for all the crying over how high the corporate tax rate is, it’s pretty much a myth. As Robert Reich points out, corporate taxes used to account for one out of every three dollars of federal tax revenue back in Eisenhower’s day. Now they account for only one out of every ten dollars.
And no less a knowledgeable person on corporate profitability than Warren Buffett says that “corporate taxes are not strangling American competitiveness.”
We don’t need to lower corporate taxes. We need to close the loopholes so they start paying their fair share.
Unfortunately, the Obama Administration has already proposed lowering the corporate tax rate to 28 percent, though he cushions that by proposing to close loopholes, as well.
What’s likely to happen, however, is that Congress will agree to lowering the corporate tax rate while closing few, if any, loopholes that corporations routinely use.
That’s how Washington works these days.
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9 Comments so far
Show AllThe fact that many corporations pay next to nothing and that the average payment is 12.1% are important facts in the debate, but I don't feel being intransigent about lowering the rate is helpful to increasing the average that is actually paid. I'd rather see a more nuanced proposal than "just say no" to reform. How about demanding that a package that drops the rate from 35 to 28 must be accompanied by analysis (by CBO?) that shows that the loopholes dropped (which I know won't be all of them - Obama wants to keep some of them himself) result in an increase in the average rate.
I don't know. First, basically any kind of profit (or rent etc) can mean accumulation of power and thus, in the long term, destruction of any possibility of democracy, unless there is an *absolute* limit on accumulated wealth.
Second, what's more important is how much in total corporations and individuals contribute and whether their contributions are in relation to their effect on policy, ie. their power.
Here's this for example: http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm which says corporate taxes account for 9% of federal revenue, while individual income taxes account for 42% and payroll taxes for another 40%. Simply put: individual, non-corporate contribution to federal income is overwhelming, while popular influence on the largest scale federal policy decisions is minimal. Individuals pay for everything but decisions are made in the corporate interests. Don't know, I think this is a much simpler and more obvious way to put things. For example, corporate taxes hardly even cover educational costs, while the entire system of public education is being reorganised according to corporate interests. This is imo a simple and understandable argument and something that one can think about. But without context (ie. that corporations contribute nothing but have power over everything, and even doubling their relative share wouldn't bring them close to the amount of individual taxes collected), percentage points don't mean much.
Interesting, helpful analysis, Atomsk.
I'd like to see a Ross Perot style TV show/expose using colorful graphics to depict the following (in an effort to truly educate the public):
1. Cuts to (how many?) on Social Security are being considered
2. Cuts to post office hours and locations are being deployed
3. Cuts to library hours are underway
4. Cuts to public schools and teachers' positions are underway
5. Necessary road/bridge repairs (and other infrastructure renovation) are being placed on the back burner
6. Nuclear power plants are being re-licensed without serious investments in shoring up their safety features
7. No where is there any serious call to produce more fuel efficient vehicles, and as the climate change events ratchet up more costs to communities in the way of clean-ups, will the needed number of fire fighters and other resources exist?
These are just the items that come to the "top" of my head... there are so many more. The public needs to see the LINK between further corporate tax cuts and a continuing decimation of their quality of life.
A really bold report would also show the link between militarism and money directed at the MIC, foreign wars, and further weapons under development, added to the phenomenal sums handed over to the bankers and/or Wall Street... so that the big gambling games that now constitute about 40% (They call it "Finance") of our economy can continue, while the natural world is denuded and left in deadly ruin.
And still the corporate overlords demand more!
Well I don't think this was an analysis, just an imo simpler way to look at the issue, or a pattern of an argument at best. After all, shouldn't the ones who pay have the power to decide what their money is spent on? If people in general, as is sometimes indicated in opinion polls, prefer decreasing military spending sharply to increasing it, rebuilding public education to destroying it, developing green energy to increasing reliance on fossil fuels, and if they are the ones providing the money - what other arguments could there be if anyone takes "capitalist" liberal "democracy" seriously? (Well, no one really does that but at least this argument shows the hypocrisy...not that it's too difficult with any other approach.)
In the TV show idea, you could add information about what each individual issue costs, how much of it is paid by "business" money and how much of it by individual taxes and, (inversely) related to this, how much influence the "public" wields relative to corporations. (You can do this by comparing public opinion measured by polls with business interests, which are expressed pretty openly in the business press, business plans, corporate reports etc.) Social Security cuts? Who pays for it? Do the ones paying for it want cuts? What the fuck do the people who have basically no stake in it think they are doing meddling with it? It's not theirs. It's yours.
But my biggest annoyance is with education. Individuals pay basically the entire cost of education while corporations actually make money off of it - but the interests of individual real-life citizens is NEVER considered (except if it coincides with corporate interests, but that's such a rare special case, it's not even worth talking about). *You* pay (and pay way too much) - and corporations whose interests are directly opposed to you decide what to do with your money? You pay through the nose so that your child can be turned into a mindless drone working an assembly line for a dollar a day? (Or even worse, .) You pay for your child to be actively prohibited from reading books that are in his actual interest to read? You pay so that education could be turned into worthless online shit?
But even without these huge issues, just the basic idea that individual citizens should pay for their children to acquire particular vocation-specific skills that "add value" ONLY for corporations is idiotic. Why don't the corporations themselves pay for these skills? Isn't this just another form of externalisation of costs? On a huge scale also - not just because there's a concrete cost to education you have to pay, but also because the *opportunity costs* for the individuals (as in, studying worthless and most often even damaging bullshit that's good only for "business", instead of stuff that's interesting, productive and non-destructive and would allow children to actually understand and fight for their own rights against hostile concentrations of power) are incredibly high. Basically, American citizens are paying through the nose for a system that's increasingly a tool of enslaving them (well, the words may be too strong but you know what I mean).
If you already pay for it, why the hell would you accept someone else controlling it? If business doesn't pay into it (which it really doesn't), it should have NO say in what it does whatsoever. That is according to its own fucking principles. You pay nothing, you get no say, isn't that how it goes?
You can not expect the president to actually do something progressive about corprate taxes and still collect the big corporate bucks he needs for his smear fest with Romney in november. Obama's chief advisor on creating jobs is the CEO of GE a company that has barely paid any taxes for quite awhile now and is a champion of sending American jobs overseas. You would have to be pretty stupid to believe Obama's populist rhetoric because his actual policies are very much like the republicans.
Syria: Clinton Admits US On Same Side As Al Qaeda To Destabilise Assad Government
http://www.globalresearch.ca/index.php?context=va&aid=29524
War Criminals 2012!
Both Democrats and Republicans want to lower corporate tax rates, the trick is how to go about doing it so the public can't figure out who's to blame, and THAT is how it works period.
Hmmm
80% of the stock in corporations in the US are owned by the top 5%. And 80% of that is owned by the top 1/2%. So in reality a tax increase on corporations is in fact a tax increase on the really really really rich. Which is why the bought and paid for Congress keeps giving them tax cuts. Of course the really really really rich will turn around and dump those increases on the backs of the working people of America. The best method is to tax the rich directly. Close all tax loop holes and put their rate on ALL income at 39%. In particular focus on unearned income.About 3/4 of the the income for the really really really rich is unearned (no surprise no one honestly believes these people work) So interest, dividends and capital gains above a certain threshhold amount say $50,000 would be taxes at a much higher rate. This isn't rocket science people. Now before all you right wing radicals start screaming consider this: Post world war II America had the highest tax rates for the wealthy in the world. But we enjoyed the highest growth rates and the highest standards of living for the other 99%. We have a finite pie of wealth. If the the top 1/2% is getting 80% that just doesnt' leave much left over for the rest of us. And if the top 1/2% is getting that money by stealing the fruits of our labor than it is truly a crime against humanity.