Tax day. At a time when elites are lecturing us on deficits, giant corporations are demanding even lower taxes for themselves. Their message: “deficits equal austerity for thee and lower taxes for me.”
Giant corporations and opinion elites are calling for tax “reform.” When you hear the word “reform” coming from corporate lobbyists, just run. “Reform” as used by them never means anything good.
The big, popular proposal in D.C. is “tax reform” to close loopholes that let big corporations and the rich escape some of all of their taxes, and (here is the catch) use the resulting revenue to lower tax rates for corporations and the rich.
The “reformers” are not proposing to use that money to cut deficits and especially, especially not to provide jobs. They are not proposing to use the money to repair the country’s crumbling infrastructure, or for education or any of our other desperate needs. They want to use that money to give tax cuts to corporations and the rich.
They call this “pro-growth” tax reform. When you hear the words “pro-growth” it always, always means lower taxes on the rich. This is the old “cutting taxes increases growth” mantra that says “government takes money out of the economy,” so the less money government (aka “We the People”) has, the more money is in the economy. (“Government doesn’t create jobs” and “government spending is bad,” etc… as if jobs in governments are not real jobs, and government spending is not done in the economy…) They say that if we cut taxes the resulting “growth” will increase tax revenue, etc.
So in one breath we are lectured that the country’s budget deficit is so bad we have to cut Social Security, unemployment benefits and the rest of the safety net for regular people. And in the other breath they say the money we get from closing corporate tax loopholes should be used to lower corporate tax rates. Not to reduce deficits, not to rebuild the country’s infrastructure, not to educate our kids, not to strengthen our courts and law enforcement (especially law enforcement when it comes to the big banks) or for anything else we might do to make our lives better. No, that money should go to lowering taxes for the biggest corporations.
“Tax reform” is really about raising more campaign cash and lining up more good jobs for legislators and staffers after they leave government. It opens up a process that lobbyists will go to town with. When the tax code is opened up for changes, lobbyists will swarm to make sure the changes benefit their clients.
It also opens up career opportunities for legislators and their staffers. If they “play ball” and let the giant corporations have their way with them, later they can get high-paying (payoff) jobs with those corporations. If they make waves, rock the boat, etc., then no lucrative payoff jobs later.
Fix the Debt, for example, is the CEOs of a bunch of corporations saying the deficit is terrible — and calling for big tax cuts for … their corporations.
From Fix The Debt’s “Core Principles“:
- Policymakers should acknowledge that our growing debt is a serious threat to the economic well-being and security of the United States.
- It is urgent and essential that we put in place a plan to fix America’s debt. An effective plan must stabilize the debt as a share of the economy, and put it on a downward path.
Then comes the clincher…
- Include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues, and reduces the deficit.
As if lowering corporate taxes will cut the deficit. Heh.
And to make matters worse, they call for a “Territorial Tax” system, meaning they pay no taxes on profits they claim are made outside of the country — like how Google made $10 billion in Bermuda last year. Heh.
Another corporate group calling for the territorial tax system is the LIFT coalition. I wrote about the Lift coalition in Beware the New Corporate Tax-Cut Scam: LIFT Is A Big LIE,
First it was Fix the Debt, with tax-dodging corporations “leading the charge for massive new corporate tax cuts paid for with cuts to Social Security, Medicare, and Medicaid.” Now there’s a new “LIFT America coalition,” pushing for massive, massive corporate tax cuts, without bothering about cutting benefits. LIFT stands for “Let’s Invest for Tomorrow,” but as Citizens For Tax Justice (CTJ) points out, it really ought to be called LIE, for “Let’s Invest Elsewhere.”
The executives who run the giant multinationals want to be let off the hook for paying taxes on profits they make outside our borders. As an Apple executive said to The New York Times, giant multinationals “don’t have an obligation to solve America’s problems.” And to prove it, American corporations are holding $1.7 trillion in profits outside the country – just sitting there – rather than bringing that money home, paying the taxes due and then paying it out to shareholders or using it to “create jobs” with new factories, research facilities and equipment.
Another corporate group pushing for lower corporate tax rates is the RATE coalition. I wrote about this group in Obama Shouldn’t Buy The Lower-Corporate-Taxes Line, included some interesting historical information. From that post:
- The top corporate tax rate was 52.8% in 1970, 48% through that decade, then 46%, then the 1986 tax “reform” phased them down to 35%, which is where the top rate is currently.
- A 2011 report by Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy ITEP) found that as a share of total tax revenue corporate taxes fell from 26.4 percent of total tax revenue in 1950 to just 7.4 percent of total tax revenue in 2010.
- Meanwhile personal income, Social Security and Medicare taxes increased from 51.4 percent to 83.8 percent of total tax revenue during the same time period.
- According to the Center for Budget and Policy Priorities (CBPP), Corporate tax revenues as a share of GDP have fallen to near historic lows.
- At 1.7% of GDP in 2009, the US has the third-lowest effective corporate burden in the world. according to the latest OECD analysis (for 2011 revenues), based on corporate taxes as percentage of GDP.
Also from that post:
What Do Smaller Businesses Think?
What do the smaller businesses — the ones who cannot afford to purchase legislators and legislation that brings them competitive and financial advantages — think about these tax-cut proposals?
The American Sustainable Business Council (ASBC) and the Main Street Alliance released a poll showing small business owners are strongly against these corporate tax loopholes. According to the poll, more than four out of five small business owners (85%) oppose a territorial tax system to exempt offshore profits from U.S. taxation. Frank Knapp, vice chairman of ASBC, said,
“Through this poll, small business owners are sending a clear signal to Congress and the President. The priority for reforming our nation’s tax code is to stop multinational corporations from using offshore tax havens to avoid paying their fair share of taxes. And these elected leaders are also put on notice to not support any proposal for a territorial tax system for multinational corporations that would lock in what small business owners of all political persuasions view as completely wrong and unfair.”
Joshua Welter, director of special projects for the Main Street Alliance, said,
“Small business owners see two problems with the current system for taxing U.S. multinationals. First, they know we can’t afford these loopholes, since the reduced revenue forces cuts in economy boosting investments, such as education, Social Security and Medicare. Second, the overseas tax structure is a big thumb on the scale for big companies, and a thumb at the nose of small business.”
Deficit Already Falling Dramatically
Here is the thing. These deficit scolds and tax-cutting groups are always using the deficit to scare people and stampede politicians into doing things that benefit them and hurt We the People.
But the deficit is already down about 50% and falling rapidly.
From the post Deficit Is Falling Dramatically, But Only 6% Know That,
There is no deficit problem. The deficit is down about 50 percent as a share of gross domestic product just since President Bush’s fiscal year 2009 deficit and is falling at the fastest rate since the end of World War II. Yet the Washington debate is about how and where to cut us back into recession. Why?
[. . .]
Here is a chart of the deficit as a percent of GDP: (Data sources below)
Once again, because it might be hard to register due to the drumbeat of deficit-scare propaganda, this is a fact: the deficit is falling at the fastest rate since the end of World War II. It is down about 50 percent as a percent of GDP just since Bush’s huge $1.4 trillion fiscal 2009 deficit. And the deficit is projected to be stable for a decade.
So at a time when the “Serious People” are calling for austerity to cut the deficit (that is already way down) they are also calling for big tax cuts — for them.
Tax cuts were a mistake and caused these huge deficits. More tax cuts for corporations now are an obvious mistake. Europe’s experience and our own economic stagnation demonstrate that austerity is a mistake. With the deficit down dramatically, listening to deficit scolds is a mistake. And the idea that cutting taxes for the rich and corporations is a way to increase growth and revenue is not a mistake; it is just ridiculous.
Government spending in a democracy is by definition things We the People do to make our lives better. It helps the economy and it helps us. We should do more of it. We should return tax rates on the rich and corporations to pre-Reagan levels to start to undo the damage done by the Reagan Revolution.