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What's Worse Than Paying Taxes?
The other day I helped my son with his taxes. He was doing them for the first time, after spending a year with his new college degree looking for a job and managing his student loan account. We found out that he would be paying more in federal taxes than a hedge fund manager who made $5 billion. We calculated that he wouldn't be getting a state refund, because Illinois raised the state tax rate from 3% to 5% in 2011. He would have to pay the full 5% state tax. The top 20 corporations in Illinois paid 2.2% from 2008 to 2010, when the corporate rate was 7.3%.
Having ruined my son's day with this information, I made myself feel even worse by digging deeper into the details of tax avoidance by the wealthy. To get into the 1% club, it takes about $400,000 in salary. Members of the club can make up to 10,000 times MORE than this and pay ZERO taxes because they don't call their income 'income' like we do. They call it "carried interest," which means they can defer taxes almost indefinitely.
Then I went back a few years, to the 1970s, when soon-to-be-in-power Republicans became convinced that lowering taxes on the rich would generate more revenue. It didn't work. Federal revenues are currently at their lowest level in 60 years. The average federal tax rate has gone way down for the richest 1%. Yet remarkably it's gone UP for everyone in the 40th to 95th percentiles of taxpayers, which includes most of the rest of us.
How do wealthy individuals respond? They pout, and avoid taxes even further with clever strategies, such as hiring "full service tax evasion advisers" to help them elude the Internal Revenue Service.
It got worse when I compared my son's taxes to those of corporations. In the 1950s, for every dollar of payroll tax paid by workers, corporations paid three dollars. Now they pay 16 cents.
From 2008 to 2010, the top 100 U.S. corporations paid only 12.2% of their income in taxes, and thirty of them paid nothing at all.
At the state level, a study of 265 large companies revealed that an average of 3% was paid in state taxes, less than half the average state tax rate of 6.2%. The 265 companies avoided a total of $42.7 billion in state corporate income taxes over the three years.
How do corporations respond? They pout, and complain about the corporate tax rate in the U.S., even though the percentage actually paid is very low relative to other OECD countries. Then they look for tax havens. Citizens for Tax Justice reports that the 280 most profitable U.S. corporations sheltered half their profits from taxes between 2008 and 2010.
The rest of us pay a variety of taxes that can consume over 40% of our incomes, such as state and local taxes, payroll taxes, property taxes, sales taxes, and excise taxes. These taxes are regressive and steadily rising. In my hometown of Chicago, the city with the highest sales tax in the country, where the state tax rate was recently increased by 66% and property taxes went up $300 per homeowner, and where 2012 state education spending was cut by a greater percentage than in any other state, a tax break of $85 million per year was given to a company (CME) that has a profit margin higher than any of the top 100 companies in the nation.
When my son's in a better mood I'll tell him about all this. I'll try to convince him that despite all the unfairness, paying taxes is still the best way for many of us to show our patriotism. The more benefits one has received from society, the more he or she should return to our country to keep it productive and well-maintained.
Worse than paying taxes, I'll tell him, is NOT paying taxes. Tax avoiders are cheating millions of people who have contributed to America's productivity over the years and would like to share in some of the resulting benefits.
And then I'll advise him not to stand too close when I start my own taxes.
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43 Comments so far
Show AllIt is time to label tax avoiding corporations what they are: Traitors. It needs to be plastered on their walls and windows: Tax Cheaters Are Traitors.
It is only getting better for the 1% and worse for the 99%:
Obama keeps promising more "tax reform" which in Obamaspeak means further reducing corporate taxes for companies like Boeing and GE that post billions in profits each year yet pay no taxes, AND get tax credits. You can bet your last nickle that Obama's "tax reform" will happen by this time next year.
Temporary relief from the Alternative Mimiumum Tax (AMT) that snags more working class taxpayers each year expired on December 31, 2011. Most victims of the AMT won't know it hit them until they file 2012 tax returns, well after the 2012 elections.
B.O. coincidentally would be lowering the taxes on HIS 1% wealth. Gee, I wonder what his true motivations are?
We all know people who truly hate to pay taxes. I'm sure many CDers are the same. I've long felt fortunate that I'm able to pay taxes in the good old USA even with its myriad flaws. For those of us who typically make $50,000 or more per year we should want to help pay for all the good we share. Yes, I know there's plenty of bad too, but perfection is not possible with humanity. Progressive taxation has been slipping badly for over a half century. It's time to change that or watch our nation sink. Certainly we can easily find anomalies, but far more often than not, republicans cut taxes and democrats hold the line or raise them slightly. It is a tough fight to raise taxes. My old Senator Walter Mondale promised to raise our taxes when he ran for President. That did not work out.
Most folks are OK with paying their fair share of taxes.
As Greenwald points out...every dollar that corporate taxes are reduced is another dollar the goverment is going to extort from you and I.
"bothpartiesarec..."
I found it very interesting that the author of this article goes back to the 1970s to criticize the republicans (which is appropriate), BUT
does not mention that the same corruption is pushed by the democrats.
This is especially noteworthy since the author is largely focussing on the corruption in Illinois where the attacks are under the control of a democrat governor, a democrat dominated assembly, and a democrat dominated senate.
We all have heard again and again and again about the corrupt governor of Wisconsin, but almost no criticism of the democrats in Illinois implementing the same attacks.
The main difference is that the democrats say they don't want to do what they do and the majority of voters and the very unions which are being stripped of benefits then just go along with the attacks.
The democrats, the republicans, and the libertarians are corporate agents.
Decades long employees of the USA gov. are stating this is the most totalitarian administration they have every experienced, see Oilybombers use of espionage act for punishing those revealing corruption.
Maybe we can develope a system where instead of paying people to work a company would just pay a fee to buy a worker then provide that worker with food, shelter, and clothing. lf that worker has children the company would own those children and when they got old enough to be productive they could work for the company or sold to another. Oh wait a minute l forgot that was.........nevermind.
Corporations have learned that owning politricians is a much better investment than owning slaves.
Smart one, Ray. To which I'd add:
And credit card interest rates create a system of indentured servitude without the pesky need to feed, clothe, or house the individuals thus indebted (and likely for life).
If you read the history of slavery, you will see that slave owners did set up factories staffed by slaves. John C. Calhoun promoted the idea. But it failed miserably precisely because the slave owners had to feed and clothe not just the workers, but their families, too.
By contrast new manufacturers in Europe only had to pay very low wages and only to the particular person working in the factory. They had no duty to feed or clothe either their workers or the families of the workers. Since many of the new factories employed children, they could pay very low wages.
For all the riches the 'elite corporations' have pulled from the 'commons' to sell for their own profit, we the people should owe absolutely nothing to the government. The government through the swindling of the corps have ripped us off for trillions of dollars worth of resources. Hell the streets could be paved with gold IF we were that stupid. I say we are that stupid if we don't get crackin'. Rich peoples panties in a wad makes for good fire starter.
>>It got worse when I compared my son's taxes to those of corporations. In the 1950s, for every dollar of payroll tax paid by workers, corporations paid three dollars. Now they pay 16 cents.
Yeah but but in the 1950s there were no jobs in the United States of America as the tax burden was too high and those with Money decided not to invest it, right?
The Government ran a huge deficit as well since everyone KNOWS tax revenues go down as taxes raised! Economists say that everyday!
Now contrast that with today. Corporations investing billions in The USA to take advantage of those lower taxes, millions of jobs created, the Government balancing the budget all courtesy of lower taxes on the wealthy and the Corporations!
That's bull, corps are sitting on trillions right now. The bailouts went right into the coffers of the largest of them and they have not returned much of that in the way of jobs or benefits to workers. Balancing the budget, creating millins of jobs, you have to be delirious to believe that. What a shill for the GOP, go hide your head for your shameful inplications.
Keep your eyes open, lorenzolarue, you've missed the tongue in the cheek.
Sarcasm does not work well on this site. Why?
Lorenzo, it appears you were born without the Sarcasm Gene.
The gap between us and the ruling class... isn't that the czar chasm?
Finally, a true patriotic American! Thank you, GwNorth, my sentiments exactly! How can these pinko liberals not see this? I think they strained their eyes with all that pot smoke that Bill Clinton didn't inhale. Why should job creators pay YOUR taxes? Just because YOU don't want to work? People say to me, "but there are like 18 unemployed people for every job opening", and my response is, "that's 18 times the work that could get done if you all worked together". Just because workers are GREEDY and don't want to divide that $9.00/hr. by 18 isn't the fault of the job creators. It's greedy, lazy, ignorant liberals who'd rather destroy America than get a job. America love it or, leave it.
GWN,
And what's more, we depended so heavily on the middle east for our oil. Now because of our drilling for oil and gas in the Gulf, in the national forests and sometimes in people's backyards and fracking we're not dependent on those sources anymore and oil and gas are cheap! Hail the free market!
The US government has shown itself incompetent to manage large amounts of money. Both Democrats and Republicans. Both parties want to spend hundreds of billions on war, on attacking other peoples in their own homes in their own communities, on the other side of the planet. I have come around to the Ron Paul position on this. Cut the national budget by trillions, most from the Pentagon, and eliminate the IRS. Let the national government run on excise taxes and corporate taxes.
Sorry, but after you eliminate the IRS, who will collect the corporate taxes?
Whatever Ron Paul says, the IRS only collects taxes, they have no say in how they are spent.
If you send monies to the federal government, you are providing material support for a terrorist organization--dont do it!!
I hope the IRS finds you. You and Grover Norquist can go to hell.
You don't seem to understand that I'm just obeying the law, as it's a felony to provide material support to a terrorist organization or one that supports a terrorist organization, of which the federal governemnt of the USA is guilty on both counts. I pay taxes; I also know what the law stipulates. And I'm not a faux Progressive like you, Greg R.
It is hard to comprehend people willfully paying taxes to the psycho killers.
It is worse when they declare their patriotism.
Qu'est-ce que c'est?
Mindless or heartless, or both.
I don't get you. Now you say you do pay taxes. So you're saying you are a hypocrite.
If I might be permitted to step in here... Greg R, you will be shaking your head frequently in the crowd you've found yourself in.
If you really pull back and think about things long and hard (it took me almost ten years), you will see that these 'hypocritical' comments are actually entirely sensible.
Paying taxes as a citizen--now-- is tantamount to pouring fuel on the fire that's burning your house down, and then asking "Why's my house getting destroyed?"
Your confusion comes from remembering a time when contributing as a tax-paying citizen might have meant something. Those days are well behind us now. Even though it's always been questionable that income tax should have been introduced, the benefits of a social welfare system were more or less evident in a lot of places. But no more.
What we have now is a psychopathic takeover of power across the globe. Those guys in Washington are taking your tax dollars and transferring it straight to the Pentagon and to the FIRE sector. It would be the best thing for everybody, without exception, to withold their tax dollars and mount the ultimate revolution. If they take you in for questioning, just tell 'em you're emulating the best and the brightest from Wall Street.
No, no, no! First, a PROGRESSIVE income tax is needed more than ever. Second, pretend that a weak federal government will somehow make things better. It will make things uglier. Lots uglier. Corporate interests and big money will compete with 50 states and thousands of localities to increase their bottom lines and take away most everything we liberals hold dear. With a strong federal government we at least have a chance to buffer big money's power. Sure it's difficult, but there is no better way. Our taxes are needed for a hell of a lot more than war and big business gifts. Take an interest. Look at where money is actually spent. A significant amount does good stuff.
Your logic is clear to me. I also strongly disagree with its direction. You are responding as someone who actually believes there's something worth preserving about a mega state. I would like nothing more than to see such a monstrosity fall apart.
But yes, that means that things will definitely get uglier too. But all current alternatives are worse, truly worse.
You're talking about what SHOULD HAPPEN... get used to thinking more WON'T HAPPEN. All chances to build a strong federal government have been undermined by years of pilfering and sabotage on the part of the finance sector. You 'liberals' have to rub your eyes and take a good look at what's actually out there now.
Phil Rockstroh's article today explains how citizens who cooperate are both the victim and perpetrater. The USA gov. is very strong, backed by all international corps, it is the enforcer for the corps. It is more fascist than ever. Yes people have trouble seeing what is actually occurring and has occurred the false words blind many.
My guess is that you are an idealist who thinks things will get better after they get "truly worse." It will likely be a long wait. Mashocism is alright for you, but most would disagree.
I shouldn't pick on you, Greg R. You seem like a sincere guy. My argument goes out to those who think as you do, though...
Again, I implore you to really study this scenario and think on the events of the last 15-20 years. Things HAVE truly gotten worse. It doesn't matter what i think about it. As a REALIST, I have to deal with the facts at hand: we're losing constitutional rights at an alarming rate; policy makers are now almost totally deaf to the pleas of citizens (sorry-- I mean 'consumers'); there are startling signs that remaining privileges are about to be revoked and every reason to think the populaion will be powerless to stop them.
You can disagree all you want... this isn't opinion I'm dishing out... it's straight rationality. The 'think happy thoughts' mentality is not going to get us out of this mess.
Small business people such as myself aren't allowed to do the defer dog with the IRS or the state tax agency where I live either. "This time we need to get into some ''vigilant sharing'/for more than just a day. . ." A little bit of the Union Gap! How about we do it full time?
Every penny collected by the IRS goes to paying the interest on debt created by the Federal Reserve. All of the income tax we pay goes to the international corporate banking cartels. Why would they tax themselves?
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For the first 140 years or so of America, no one paid income taxes. Yes, no one paid income taxes until the "ratification of the 16th amendment in 1913.
The government collected its income through tariffs, which also protected our industries. But Reagan and Clinton did away with most tariffs as a prelude to sending all jobs overseas.
During the early 20th century, American robber barons took over the entire country, created income taxes to steal from the working class, created the federal reserve to steal more from the working class, went into WWI to protect the MIC's investment in England and France (they sold weapons on credit and America entered when it looked like our debtors would lose to Germany).
Kathy Kelly the peace activist does not pay taxes. It takes courage to defy the government, even with symbolic action.
I gave money to Kathy Kelly once, but she would not take it due to some problems with the federal government. Anyway I highly respect her, but doubt she has much income.
Back when Enron owned Portland General Electric, PGE collected a state tax from all of their ratepayers. They turned it over to Enron, which used the money to write off losses elsewhere in the corporation, and Enron paid the state of Oregon $10, on a $10 Million tax bill, FOR WHICH THEY HAD COLLECTED MONEY FROM CUSTOMERS. PGE is no longer collecting that tax, but I don't think they had to pay the ratepayers back.
What is worse than paying taxes for corporate welfare? Nothing.
"Rub the eyes!" Yes I rub my eyes and wake up to this crazy, outter limits world we live in and say enough! Let those who have avoided paying their fair share of taxes step up to pay their share or pay the consequences to lighten my and tens of millions of others heavy and undue burden. Time has come to stop this insanity. We owe it to ourselves and future generations to do so. "This generation of Americans has a rendezvous with destiny" as Frankln D Roosevelt said in his day. It's time for some David Erdal and Andrew Whiten's well researched "vigialnt sharing" and "egalitarinism as a Machiavelian status escalator." These two Brits got it right.
Let egalitarianism and "vigilant sharing" put some Machiavellianism back into the human personal status escalator.