‘I pay more federal income taxes than General Electric’
The latest study from Citizens for Tax Justice and the Institute on Taxation and Economic Policy should lend credence to the larger "Occupy" movement.
Many of this country's biggest companies paid no federal taxes -- or even made money through credits and refunds from the government -- over the past three years by using an array of loopholes and tax breaks, according to a report released Thursday.
The authors examined the finances of 280 corporations from 2008 through 2010 and found that 30 paid zero taxes or used loopholes to wind up with negative tax rates. Local utility Pepco Holdings paid the lowest rate of all the firms investigated, clocking in at nearly minus 58 percent.
Under the federal tax code, corporations are supposed to pay 35 percent of their profits in taxes. But the study found many of the companies used legal tax breaks that allowed them to pay lower rates than ordinary Americans.
Plenty of politicians complain about the larger 35% corporate tax rate, which is high by international standards. But that assumes corporations are actually paying it -- and they're not.
As President Obama put it in his State of the Union address, "[O]ver the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change."
It's why the notion of "corporate tax reform" has merit. For the right, the goal is to bring down the 35% rate, but for the left, the goal is to start getting these large, prosperous companies to start paying something.
The Citizens for Tax Justice's report added, "[J]ust as workers pay their fair share of taxes on their earnings, so should successful businesses pay their fair share on their success. But today corporate tax loopholes are so out of control that most Americans can rightfully complain, 'I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.' That's an unacceptable situation."
In Soviet Russia, the IRS pays YOU!
Or in capitalist America. Whatever. NYT:
General Electric, the nation’s largest corporation, had a very good year in 2010.
The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.
Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.
Such strategies [...] have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.
Yet many companies say the current level is so high it hobbles them in competing with foreign rivals.
Yeah. We should be paying them for the privilege of being co-Americans with such excellent captains of industry. Don't you think?
The Economy Is Back On Track – The Rich Are Just Hogging It
Drum:
Earlier this morning I suggested that policies aimed at economic growth, though obviously a good thing, aren't enough to raise middle class fortunes. You also need economic policies that focus on the middle class....
It's certainly true that middle class wages tend to rise in extremely tight labor markets, like the one we had in the late 90s. Mickey Kaus is fond of making that point. But this is pretty meaningless unless you have a plan to keep labor markets perpetually tight. If you do, then believe me, I'll be the first to sign up. But no one has such a plan. In the real world, we have to deal with the fact that real per capita growth is likely to be a pretty steady 2% per year over the long term and labor markets are going to fluctuate around a level that's (hopefully) snug but not perpetually at 90s-era tightness.
The prosperity of the middle class obviously depends on a growing economy. But just as obviously, it depends on more than that. For liberalism to mean anything at all, we need to support policies that are aimed both at overall economic growth and at ensuring that prosperity is widely shared. We haven't done a very good job of that over the past 30 years.
Overcoming this failure is perhaps the greatest challenge of the pro-labor movement at present. It's especially hard since there is no longer a coordinated "pro-labor movement" to speak of, and people who genuinely care about income distribution and working conditions and that sort of thing are, by and large, in the 'journalistic' or 'public-interest' categories along with, say, environmentalists -- that is, labor seems unable to produce its own advocates.
Capital has no such problem. When I talk about corporations as 'capital unions' I think the distinction is best highlighted. Politically and economically, capital loves to cluster together; companies love to grow, and there is no physical limit on the size of a bank account. Coordination is easy, since only a very small number of people are responsible for nearly all the capital.
Labor has the flip side of the distribution: a very small amount of financial capital controls nearly all of the people - political capital - voters. While this is great for labor in political-institution terms, it's much harder to educate and coordinate hundreds of thousands of people when all the money in the world is against you. It's also why the capital coalition spends so much effort attempting to connect their preferred economic policies to conservative social policies in the minds of voters:
When asked to comment on Gov. Mitch Daniels’ suggestion that it’s time for détente in the culture war, Demint tells Fox News that one “can’t be a fiscal conservative and not be a social conservative.” Check out the video here, via Allahpundit (skip about 3 minutes in).
If they can get the labor class to believe this, then they're executing quite a great swindle by hacking into deep-seated religious beliefs for fun and profit. By tying the conservative/capital-coalition cause to issues which are emotionally important, they can implement economic policies like those we saw in the Bush years: zero job growth and widening inequality. By any rational terms, those years were an enormous failure. But in conservative terms, the experiment was a wild success. See how eager they are to repeat it:
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Really, what can I add to that?
The Fight for Redistribution at the Local Level
“Who Pays?” (PDF) from the Institute on Taxation and Economic Policy offers an interesting look at regressive state/local taxation:
Several points:
— Questions about whether things should be done at the state or federal level aren’t just about abstract constitutional views; state revenue sources are regressive.
— There is no reason that consumption tax revenue needs to be raised as a regressive retail sales tax. You can instead do a income tax with a progressive rate structure in which taxable income is defined as “income minus savings.”
— Property taxes are regressive, but much less regressive than sales taxes. Consequently, measures to cap property taxes are a kind of fake assistance to the middle class that actually helps the top 20 percent.
— Conservative intellectuals like to complain about the federal deduction for state and local taxes, but conservative politicians will never eliminate it since this is a form of tax break for rich people.
That’s all I’ve got.
Bush Tax Cuts Extended, Appropriations Pulled: Bill Clinton Wins the Night
On tax policy: Obama 1, Republicans 1, Liberals 0.
On appropriations: Obama 1, Republicans 1, Liberals 0.
With the essential omnibus pulled, the Senate has to move quickly to avoid a government shutdown. But Obama doesn't mind: he's made nice with the GOP over the tax cut and shown them he's willing to drag liberals through the mud to work with the GOP. Clinton pioneered this strategy in his term and made some great policy, and Barack has lately shown a hope to follow "Good Old Bill" down that road.
Now, that's not the best news for liberals - but Obama never has been. Since the health care debate he's been primarily fixated on getting the best possible policy out of every moment, and he's been largely successful at it. Unfortunately this often means losing the politics, because it means working within the broken system we already have. But it's his choice; not a visionary one but a practical one.
We'll survive the next two years, but radical change is unlikely. It's only the continuing internal rightward self-destruction of the Republican Party that will keep politics interesting -- Democrats have not yet shown a propensity to fight with themselves via primaries, etc. What we may see on the left, however, is a continued tension between the center-left and the left-left; it's unlikely to lead to a real party rift (as in the UK, for example), but only because of the two-party pull of presidential politics. As always, stay tuned.