FROM THE GOP, SPEAKING FOR THEIR OWNERS AND HANDLERS, the folks raking off the biggest stash of loot in modern history, we hear those familiar sad stories of (1) corporate struggles with the highest tax rates in the world and (2) the need to free up that capital to “grow” the economy. I quote from a Think Progress piece on taxation by Pat Garofalo (March 30, 2012): “Republicans have been kvetching today about the fact that, as of Sunday, the U.S. will have the highest statutory corporate tax rate in the world following a scheduled cut in Japan’s corporate tax. ‘The United States is a world leader in countless ways. “World’s Highest Taxes” is a title we should give up as soon as possible,’ wrote Sen. John Barrasso (R-WY) in a Fox News op-ed.
“‘This isn’t an April Fool’s Day joke; as of April 1, the United States of America will have reached the inauspicious position of having the highest corporate tax rate in the developed world,’ said Sen. Orrin Hatch (R-UT) in a statement. ‘I want America to be number one in many things, but having the highest corporate tax rate is definitely not one of them.’”
But hold your tears. Perhaps all is not lost. It may be healing, I believe, to go on a short trip around some statistical realities related to this mournful tale.
First, from “The U.S. Collects Smaller Percentage In Taxes Than Most Developed Countries: Study,” by Caroline Fairchild of The Huffington Post (April 8, 2013):
“While Republicans are quick to pounce on any proposals to raise taxes as a means of stimulating the economy, a new study finds that the U.S. collects a smaller share in taxes than most developed countries.
“A look at 2010 data reveals that the U.S. is one of the least taxed countries in the Organization for Economic Cooperation and Development (OECD), according to a study released Monday by Citizens For Tax Justice. The CTJ added up federal, state and local tax revenue.
“The only countries in the OECD that collected a smaller percentage in taxes are Chile and Mexico, according to the data. The OECD is a group of 34 countries that work together to improve the global economy.”
These findings confront that familiar Republican talking point that Americans face too high a tax burden. (In March, House Republicans passed Rep. Paul Ryan’s budget plan that seeks to balance the budget within 10 years without raising taxes. Ryan’s plan would eliminate 2 million jobs in 2014 and shrink the economy by 1.7 percent, the Economic Policy Institute study projected.) It’s for God and Country, folks, and clearly somebody has to sacrifice!
But perhaps this might be a good spot for a detour back to reality. In a series of charts from the website americanprogress.org that reflect a world (ostensibly) unknown to Sens. Barraso and Hatch, we can draw the following possibly useful conclusions — I quote or paraphrase the U.S. situation from each graph text:
1. U.S. tax revenue is at its lowest level since 1950. As a share of GDP, total federal revenue (2011) is at 14.8 percent, a drop of almost 6 percent since 2000. Total revenue as a share of gross domestic product has now been less than 15 percent for three straight years — the first time that has happened since before World War II.
2. The U.S. has much lower taxes than other developed countries. Government revenue in the U.S. is nearly 25 percent lower than the average OECD country.
3. Today’s top tax rates are historically low. (The recent small raise just raised the floor a tiny bit. This is a crucial bit of reality that fits the GOP story line like a glove on a porcupine.)
4. Taxes on investments are also historically low.
5. The tax on large estates has virtually disappeared. By 2010 it was gone completely. It returned in 2011 weaker than before, with less than 0.2 percent of all estates expected to pay tax.
6. The tax rates of the wealthy and super wealthy have plunged. Households with more than $1 million income dropped from 26.8 in 1992 to 22.8 in 2007. The richest 400 households dropped to 16.6, down 13 percent!
7. The U.S. corporate tax has steadily declined as a share of GDP from 7.2 percent in 1945 to 1.3 percent in 2011. I repeat that percentage: 1.3 percent.
8. The U.S. raises much less from corporate taxes than other countries. Corporate income tax revenue in the U.S. is about 25 percent below the OECD average.
9. U.S. corporations are taxed less than their foreign rivals. The average effective corporate tax rate among OECD countries is about 16 percent. Among U.S. corporations: 13 percent (effective rate after various deductions and credits).
10. U.S. tax breaks and tax loopholes have proliferated. Their total value now exceeds $1 trillion a year.
If you have been wiping away tears in sympathy with Wall Street about the brutality of the U.S. tax system, you may feel a bit confused. But be assured that nothing I have noted above is surprising to either the corporate world or to the GOP brain trust. This is a tale that has close kinship with the voter fraud rationale for creating obstacles to the exercise of the franchise by the unwashed multitudes.
The above may help you to understand the following excerpts from Vermont Sen. Bernie Sanders’s list of 10 winners in the American tax sweepstakes (“Tax Time? Not for Giant Corporations,” March 27, 2011 at sanders.senate.gov):
“Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
“Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
“Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
“Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion refund from the Federal Reserve and U.S. Treasury Department.
“Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.”
I thought it might be interesting to add one bit to Sanders list: ExxonMobil announced last week that it earned a total profit of $41 billion in 2011 (continuing a handful of similar years). On this it paid an estimated 17.6-percent tax rate — high for Exxon, which paid no federal income tax in 2009 on $45 billion!
In short, there is a reason those accounting wizards in the corporate world get the big bucks and the GOP gets the huge campaign contributions.
Sanders has called for closing corporate tax loopholes and eliminating tax breaks for oil and gas companies. He also introduced legislation to impose a 5.4-percent surtax on millionaires that would yield up to $50 billion a year. The senator has said that spending cuts must be paired with new revenue so the federal budget is not balanced solely on the backs of working families.
“We have a deficit problem. It has to be addressed,” Sanders said, “but it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We’ve got to talk about shared sacrifice.”
“Shared sacrifice”? Say what? Well, it is important to understand that this guy is, after all, a socialist.
Jerome Page is a Benicia resident.
Sharing is caring!
We want a flat, fair reformed tax code. That removes power from your beloved corrupt democrats so its not going to happen.
Have to agree, across the board 10% flat tax for every wage earner. Tax is deducted, no income tax returns required, eliminate the IRS completely. Completely fair as each and every person pays the same. Eliminate the class warfare being pushed by the Democrats. I would sign onto that plan in a second.
Jerry, your data, while partially suspect by many sources, only points out the errant ways of your hypothesis. You conclude that the USA companies and people do not pay high taxes. But, factually, our income rates, both corporate and individually are high. Let’s say you are correct that these high rates do not generate tax revenues. What can we conclude?
1) High individual tax rates do not generate large revenues. Why? Two reasons: Large deductions and high rates retard economic growth, thus lowering tax revenues.
2) Corporate tax rates are high but they do not generate large revenues. Why? Because high rates encourage companies to move capital off shore thus lowering the revenue haul.
3) Wealthy people have much higher tax rates and pay a disproportianate amount of taxes, but their overall revenue paid is declining. Why? People move assets offshore. Money does in fact move.
Jerry, your arguement seems to be if we do more of the same, just raise rates even more, we will generate more income. The definition of insanity is to repeat the same mistakes over and over again. Further, it represents the simpleton mentality of “if we raise tax rates we’ll get more money”. This simple theory has been disproven time and again. Economics is much more sophisticated.
If you want revenue to the government, we need to expand the economy, expand job growth (more people paying in) and give incentives to people and businesses to pay their taxes and not move money. How?
1) Lower and flatten tax rates. This will generate economic growth by moving money to the private sector. Flat rates will eliminate deductions. The net result is “the rich” will pay more because rates are lower and deductions eliminated. More revenue. Unemployment will drop. More revenue.
2) Lower corporate tax rates and eliminate most deductions. Same result as above. Lower rates will incentivise corporations to keep revenues home. As a corporate executive I know first hand that the current tax rules stifle growth. Companies simply cannot plan for expansion with the new regulations being implemented either by accounting rules and Obamacare. Federal intervention only adds confusion thus holding down employment.
Finally, I strongly disagree with your basic conclusion that the federal government is starved of revenue. As a percentage of GDP, federal revenue expenditures has risen from 20% to 24% since Obama has been in office. Spending is out of control and is starving private investment. Only the fed reserve by printing funny money has saved us from true financial starvation. But this will cause a whole new set of problems. Revenues to the federal government will grow when the economy grows, but this won’t happen in the current regulatory and taxation climate.
Steve, I don’t give a bat’s left nostril for your opined objections because you, as usual, document no bases, no source whatsoever for your scantily-presented figures. How did you get through school? I give you D-minus for facts and C-plus for elocution.
Thank you, Jerome. I have never wept for the Republicans, they have been far too full of themselves to listen to anyone. PB
Peter, by chance did you watch “I Don’t Know” Eric Holder or “I will need to get back with your” Steve Miller offer Testi~Lies to congress over the last two days? Who is full of themselves? They are the poster children for the basic Washington Democrats this term. Enough said, the house of cards is falling quickly now. When the great leader bit the hand of the media he mad a fatal error.
It’s fun to watch silly conservatives who think the IRS “scandal” in which no laws were broken is “worse than Watergate” and will somehow bring down Obama. Boy are you going to be disappointed (again). You’re in the fatal grip of Obama Derangement Syndrome.
Don’t cast aspersions on asparagus.
I thought Holder did a good job. You’re so full of errors you can’t see what passes before your eyes.
In the book THE ART OF URBAN SURVIVAL, Stefan Verstappen describes two types of criminals, the psychopatic and nonpsychopathic criminal. The psychopatic criminals are found everywhere and have the following Key Characteristics: 1. Lack of Empathy, 2. Lack of Remorse, 3. Superficiality, 4. Grandiosity, 5. Irresponsibility, 6. Impulsive Behavior, 7. Poor Behavior Control, 8. Lacking Goals, 9. Compulsive L ying, 10. Manipulative, 11. Anti-social Behavior. These are the “elite” in our society. And, they can be found in the political arena in Washington — Republican AND Democrats. Remember, these people are liars! They say whatever needs to be said to get what they want — power, money, and influence. So, when Republicans complain about the high corporate tax rate, remember that you and I paid MORE in Federal Income Taxes than Bank of America, Verizon, Apple, and nearly every large multi-national corporation in America. They have done so since Nixon signed an Executive Order during the VietNam War at the request of his buddies on Wall Street, who were spending a lot of money overseas and didn’t feel as if they should pay taxes on that money. Most, if not all, multi-national corporations assign their profits to their office found on Bermuda. Well, it’s not an office exactly. It’s a Post Office Box where they say their profits are made. By saying they make their profits on Bermuda, they don’t pay ANY income taxes! As I said, you and I and your readers all paid more in taxes than any of these corporations. It’s sickening. Go to usuncut.org for more information.
Back in College Town…
Back in College Town
I didn’t aspire to be No junkman,
I didn’t aspire to fix No drips,
I didn’t aspire to fix No broken gates,
I didn’t aspire to sit and wait…
So after a tour of duty in Corporate America,
I now work for the widow who needs stuff taken to the dump,
I work for the disabled who can’t walk or jump,
I work for the single dad to assemble his boys’ bunk beds,
I work for the single mother, her ex-,
her neighbors on both sides of the block,
and her brother-in-law in another town too.
What’s my Secret of Success? I’m a survivalist,
there are more toilets to fix
than corporations to work for in America.
One day the grassroots approach to everything
will be the only approach.
Moguls will eventually hump themselves out of everything
in their pursuit of greed and sell off even each other.
When everything is offshored, onshore will be a new idea again.
And the Native Americans and I will still be here
smiling, fixing toilets and grinding acorns into nutbread.
©Peter Bray, 5/17/13 All rights reserved
Remember, all poticians are dirty whether they are Republican or Democrat! I hesitate to stand up for either party. You would be hard-pressed to find 1 or 2 elected officals in government in Washington DC that were honest!
Check out the Apple trick:
http://wap.nytimes.com/2013/05/03/business/how-apple-and-other-corporations-move-profit-to-avoid-taxes.html
Reading Mr. Page’s piece, which summarizes statistics obtained from “American Progress”, I am reminded of the Aaron Levenstein quote:
“Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital.”
Here are some actual numbers of taxes paid by selected corporations.
I note also that all but one shown below paid a higher net rate then President Obama (18%) which is not too far from Romney’s 14%, for whih he took so much heat.
From the TOP 25 Highest Corporate taxes paid:
1. ExxonMobil – Income taxes paid: $27.3 billion
Total revenue: $486 billion
Net income: $41 billion
Effective tax rate: 42%
2. Chevron – Income taxes paid: $17.4 billion
Total revenue: $254 billion
Net income: $26.9 billion
Effective tax rate: 43.3%
3. ConocoPhillips Income taxes paid: $10.6 billion
Total revenue: $251 billion
Net income: $12.4 billion
Effective tax rate: 45.6%
4. JPMorgan Chase -Income taxes paid: $8.2 billion
Total revenue: $111 billion
Net income: $19 billion
Effective tax rate: 29.1%
5. Wal-Mart Stores – Income taxes paid: $5.9 billion
Total revenue: $447 billion
Net income: $15.7 billion
Effective tax rate: 32.6%
6. Microsoft – Income taxes paid: $5.3 billion
Total revenue: $72 billion
Net income: $23.5 billion
Effective tax rate: 15.9%
7. Wells Fargo – Income taxes paid: $4.9 billion
Total revenue: $87.6 billion
Net income: $15.9 billion
Effective tax rate: 31.5%
8. IBM – Income taxes paid: $4.2 billion
Total revenue: $107 billion
Net income: $15.9 billion
Effective tax rate: 24.5%
9. Apple – Income taxes paid: $4 billion
Total revenue: $128 billion
Net income: $33 billion
Effective tax rate: 24.6%
10. Freeport-McMoRan Copper & Gold
Income taxes paid: $3.4 billion
Total revenue: $20.9 billion
Net income: $4.6 billion
Effective tax rate: 35%
17. General Electric -Income taxes paid: $2.92 billion
Total revenue: $147.3 billion
Net income: $15.9 billion
Effective tax rate: 28.5%
19. UnitedHealth Group Income taxes paid: $2.74 billion
Total revenue: $102 billion
Net income: $5.1 billion
Effective tax rate: 35.4%
Data: Thomson Reuters Fundamentals via FactSet Research Systems.
http://werenotbrokemovie.com/
Thank you, Real American, we are a Predator Species in a Predator nation…the trick is to determine whose plate you’re on and to do something about it. Many THANKS FOR YOUR CONTRIBUTIONS ALWAYS. PB
http://www.peterbray.org/pedro
You can watch this documentary, WE’RE NOT BROKE, on Hulu for free. You just have to sit through the ugly commercials. http://www.hulu.com/#!watch/442931. The producers of this documentary refute the numbers presented by DDL above. The corporations listed didn’t pay ANY income taxes whatsoever!
Excellent stuff Dennis. Benirsap {Liberals figure this one out} is going to hurt the Liberals in 2014 and Hillary is no longer even on the top floor any more. The Liberals are on the run. Their comments tell the whole story., Again very good writing on important issues. Keep at it Dennis.
I do believe most of the comments so far have been very good and on subject. For sure DDL comments which I happen to agree with.