corporate taxes

In a Democracy, Freedom of Assembly Trumps “Free Enterprise”

Leo Gerard — Fri, 25 Feb 2011 09:40:22 -0500

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It’s illegal in America now to buy or sell a human being, but a recorded telephone conversation between a Republican governor and a guy he thought was a billionaire benefactor shows that it’s still possible to own a politician.

Wisconsin’s Republican Gov. Scott Walker didn’t have time to talk to Democratic leaders or union officials about his anti-union legislation – a proposal that has incited protests by tens of thousands for more than a week in Madison. But he jumped on the phone for 20 minutes this week when told the caller was billionaire David Koch, who was Walker’s second largest campaign contributor, who provided $1 million to a GOP fund to attack Walker’s opponent and who bankrolls radical libertarian organizations and the Tea Party.

Republicans like Walker, owned by billionaires like Koch, are fulfilling demands from corporate interests that government “free” enterprise by slashing corporate taxes and regulation. Over the past three years, America has suffered the consequences of a government under-funded after tax breaks to the rich and under-performing after years of lax regulation. The result: a growing federal deficit, the Wall Street collapse, the BP oil spill and the deaths of 29 Upper Big Branch miners. Still, Republicans want more government atrophy. That would leave only one restraint on corporate control of the economy, environment and government.

That one restraint is labor unions. A union is workers using their constitutionally-guaranteed freedom to assemble, the right to get together as a group, in this case a labor organization, to negotiate collectively with employers for better wages, benefits and working conditions.

Workers who gathered together in unions over two centuries in this country have succeeded in raising their wages, as well as the wages of non-union workers in competing industries. Union workers secured improved working conditions so fewer were killed on the job. And they achieved creation of the federal Occupational Health and Safety Administration, which protects the safety of all workers. Over the decades, unions played a major role is obtaining legislation barring child labor, standardizing the 40-hour work week, and creating both Social Security and Medicare.

Similarly, studies show union successes enhance the lives of all workers in a state. In anti-union states, the average worker earns $5,333 less a year, the proportion of people without health insurance is 21 percent higher and the rate of workplace death is 51 percent higher.

In addition, there’s evidence that union workers improve quality. Currently, after receiving an education from union teachers, Wisconsin youngsters collectively score second highest in the nation on the ACT/SAT college admission tests. By contrast, the five states barring teacher unions rank at the bottom of the pack: South Carolina dead last at 50^th; North Carolina, second last at 49^th; Georgia third from last at 47^th; Texas fourth from last at 47^th, and Virginia ever so slightly better at 44^th.

Still, Wisconsin Gov. Walker wants to destroy his state’s teachers unions. Two studies determined that public workers, that is those employed by governments such as teachers, firefighters and police officers, earn less than their counterparts in the private sector when both benefits and education are factored into the calculation. It wasn’t union workers, in the public or the private sector, who caused states’ financial crises. That was gambling on Wall Street, which ravaged the economy. Still, Republican governors across the country are demanding that government workers pay.

The government workers in Wisconsin already agreed to accept Walker’s financial demands – that they pay more for their pensions and health care. This negates Walker’s contention that this dispute is about the budget. The governor is demanding more than those financial concessions. He wants the legislature to cripple the unions’ ability to bargain for improvements in the future. In his “budget repair bill,” he would strip government workers of their right to negotiate over working conditions and benefits. They’d be able to discuss wages but could never get an increase above inflation.

This is union busting. At the demand of corporate interests. And Walker is joined by Republicans in Ohio, Indiana, Oklahoma, Tennessee and others in attempting to do it, both to private and public sector workers.

This is not about money. It’s about controlling America. Corporations have bought Republicans, who now chant the corporate mantra that government coddles its citizens with the likes of mine and food safety rules.

Walker’s eagerness to talk to David Koch illustrates this. Koch and his brother Charles own the second largest privately-held company in America. Only the fortunes of Warren Buffett and Bill Gates exceed the Kochs’ $35 billion. They’ve used that money to finance the supposedly-grassroots Tea Party and conservative groups like the Americans for Prosperity Foundation (APF) that have funneled money into anti-reform policies – including attempts to reverse environmental and health care legislation.

It’s a giant circle. Koch got Walker elected. The Koch-backed Tea Party now rallies in Madison against the public employees. The Koch-financed APF bought $320,000 in TV ads against the public workers. Other Koch-financed GOP governors are sending letters of support to Walker. In his few weeks as governor, Walker passed legislation to lower tax rates for and limit damage awards against businesses like the Kochs’. In addition, tucked into the anti-union bill is a provision that would enable Walker to sell the state’s power plants to the Kochs without bids or state agency review.

Corporations are accomplishing their goal of shriveling government to the point of ineffectiveness so “enterprise” is “free” to run rogue. Now with their purchased politicians, corporations are trying to do the same to unions – the only organization other than government that has traditionally effectively defended working Americans.

In the recorded conversation between Walker and a liberal blogger posing as Koch, Walker accepted an offer of a vacation trip from the “billionaire” if he “crushed” the public employee unions and said his effort was to get “our freedoms back.”

That’s exactly right. This is a contest between the excesses of “free” enterprise and the constitutionally-protected freedom of assembly. And getting “our freedoms back” means wresting them back from corporations.

Gilded Age Taxation

Eric Lotke — Sun, 12 Apr 2009 16:00:09 -0400

» Full report: "Gilded Age Taxation"
» News Release: U.S. Tax Code Widens Gap Between Wealthy and Middle-Class Americans
» Robert Borosage: "Astroturf tea parties" and "peddling bull" on taxes
» Eric Lotke: April 15th — The Issue Is Fairness
» Bernie Horn: A Mad Tea-Party

The problem isn’t taxes. The problem is who pays taxes and who gets the benefits.

The federal tax code becomes less fair every year. Thirty years ago, the tax code was broadly progressive, reflecting shared contributions to public investments and our common good. Loopholes were fewer and covered such items as home mortgages that everyone could understand and appreciate.

Now the tax code is a scam. Billionaire hedge fund managers pay taxes at lower rates than their receptionists. Corporations get tax breaks for moving jobs overseas. Oil companies with the largest profits in corporate history receive annual tax breaks worth $14 billion, roughly twice the budget of the Environmental Protection Agency.

While rich people reap tax breaks, working people struggle just to keep even. Adjusted for inflation, weekly wages were lower in 2007 than they were in 1979.

This inequality is no accident. It is not the result of market forces, globalization or technology. It is the result of policy decisions that could have been made differently.

Income inequality is rising — measured by the ratio of after-tax income of the top one percent (1.1 million people) to after-tax income of the whole middle 60 percent (68.3 million people). Top-end taxes are declining — measured as the average effective tax rate of the top one percent. The trend lines for top-end tax cuts and income inequality since 1980 form the X in the chart on this page and in the report.

Our report explains the X. Inequality rose 144 percent; top-end taxes dropped 15 percent.

We also explain what to do about it, and how to make the code more progressive. Additional detail can be found at Reversing the Great Tax Shift by the Institute for Policy Studies.

Finally, our report explains what taxes are for. From schools to roads to hospitals. Our government performs these functions. It isn't free. And paying for our needs is the essence of responsible leadership.

Taxes: Myths and Realities

OurFuture.org Staff — Thu, 30 Oct 2008 16:59:54 -0400

When talking about taxes, conservatives present themselves as champions of beleaguered average wage-earners and characterize opponents of their tax policies as “socialists” whose efforts to "soak the rich" would drag down the economy. Here are some facts you should know about the impact of tax policies enacted by the Bush administration and the realities behind conservative arguments about taxation.

Fairness

During the Bush years, wealth was redistributed—upward. Under the Bush administration, the incomes of middle-range households have stagnated. Workers with earnings in the lower range have lost ground and, taking inflation into consideration, on average they now earn less than they did in 2000. [U.S. Census Bureau] All the income these workers lost went directly to the top 20 percent of households, the only group whose share of income rose over the last eight years. [U.S. Census Bureau] Income inequality in the United States has skyrocketed since Bush took office, making America the world’s third-most economically unbalanced country, behind only Mexico and Turkey. [Organization for Economic Co-operation and Development]

It’s the wealthy, not working Americans, who avoid taxes. Conservatives claim that more than 40 percent of Americans pay no income taxes right now, as if it’s low-income workers who are skipping out on their tax responsibility. But it's the wealthy who enjoy most of the income generated by capital investments—and that income is taxed at a lower rate than the income middle-class workers earn. Warren Buffett pointed out that it is unjust for him to pay taxes at a lower rate than his secretary does. [Raw Story]

Progressive tax policies benefit all of America; conservative policies have failed. Conservatives accused President Clinton of “tax and spend politics” when he raised income taxes on the very wealthy to pay for investments in economic development, education, and new technology. [Washington Post] But Clinton’s policies yielded 23 million new jobs—nearly five times more new jobs than Bush created with his tax cuts for the super-rich. [Bureau of Labor Statistics]

Conservative tax policies contribute to the extreme inequality we now face—and they want to make it worse. Instead of giving everyone an equal tax cut, conservative proposals would give the richest people in America a cut that is as much as five times larger than what Republican presidential candidate John McCain promised the middle class. [Tax Policy Center] John McCain’s tax policies are even more unbalanced than George W. Bush’s: Bush gave 31 percent of the benefits of his tax cuts to the wealthiest one percent, but McCain would give them 58 percent of benefits. [Center for American Progress]

A progressive tax proposal is the best bet for small businesses. One such proposal would be to strengthen the earned income tax credit that is claimed by 14 percent of small-business owners. Doing so would help seven times as many small-business owners as would decreasing tax rates for the richest Americans. [Center for Budget and Policy Priorities]

The Capital Gains Tax Argument

Cutting the capital gains tax again would provide a huge payoff to the rich. Both the far-right Republican Study Committee and most Republicans in the U.S. House have called for cutting the capital gains tax in response to the financial crisis. Bush and conservatives in Congress already reduced the capital gains tax rate from 20 to 15 percent in 2003. [H.R. 2] The chief beneficiaries would be households earning over $200,000 a year; they would receive 93 percent of the benefits from the tax cut. Two-thirds of the tax cut would go to individuals earning over $1 million a year. [Tax Policy Center] Put another way, the average American household would receive $4 as a result of the proposed cut, while households earning over $1 million would receive $72,255. [Jared Bernstein]

One result: billionaires and hedge fund CEOs pay lower tax rates than their secretaries do. The 400 U.S. taxpayers with the very highest incomes pay income taxes worth only 18 percent of their income on average, compared to 25 percent for the typical American. Because of reduced capital gains taxes, the top 400 taxpayers cumulatively saved $10 billion between 1995 and 2005. [CBPP] Billionaire Warren Buffet famously criticized our tax system for taxing him at a substantially lower rate than his secretary. [Raw Story]

The capital gains tax is already ridiculously low. The current capital gains tax rate of 15 percent is the lowest it’s been in years. The 1986 Tax Reform Act set the top rate at 28 percent and later legislation lowered it to 20 percent in 1997 and to 15 percent in 2003. Today, the top federal income-tax rate for ordinary income is 35 percent, meaning that earned income is taxed at a rate 2-1/3 times higher than income from capital gains. That’s simply unfair. There is no good reason for wealth to be taxed at a lower rate than work. [Citizens for Tax Justice]

The Truth About Corporate Taxes

The problem is not that corporations are overtaxed. In fact, a whopping two-thirds of American corporations and foreign corporations doing business in the United States pay absolutely no federal income taxes—despite taking in $2.5 trillion in sales. [Government Accounting Office] In 2005, 28 percent of large foreign companies doing business in the United States (those with more than $250 million in assets or $50 million in sales) paid no taxes.

Compared to our competitors’ corporate tax rates, the U.S. rate is low. According to the World Bank and PricewaterhouseCoopers, the United States’ total corporate tax burden ranks 76th of over 100 countries. [World Bank] When conservatives claim that the U.S. tax rate is high, they’re talking about the “statutory rate.” But corporations treat the statutory rate as just a guideline—they use offshore tax havens and accounting loopholes to pay much lower actual rates. The tax rate corporations actually pay is lower than the rates of economic competitors such as China (15th highest tax rate), India (19th), and Mexico (51st). [World Bank]

The U.S. collects less in corporate taxes than other wealthy countries do. Measuring tax collections as a share of GDP is a good way to put a country’s tax rate in the context of its economy’s size. In the last seven years, the U.S. has collected an average of 2.4 percent of its GDP in corporate taxes—less than the average 3.4 percent collected by other industrialized nations. If laws remain the same, U.S. corporate taxes will be only 1.9 percent of GDP in less than 10 years. [U.S. Treasury Department]

Corporations should pay their fair tax share. American workers increasingly carry more of the tax burden than corporations do. In the 1950s, corporate income taxes accounted for about a quarter of federal tax revenues; now they account for just one-tenth, leaving workers to pay the difference. [Economic Policy Institute]

"Death Tax" Realities

Conservatives enacted a warped estate tax law in 2001. The federal estate tax—which has been in effect since 1916 but in recent years has been dubbed the "death tax" by the right—applies only to the estates of extremely wealthy people. In 2001, the Bush Administration and some of the richest families in America pushed to enact a law that has lowered the tax and will eliminate it entirely in 2010. However, to get around Senate rules, the entire law sunsets in 2011 when the tax will theoretically return to 2001 levels. [Public Citizen] As a result, Congress will have to pass a new estate tax law, most likely next year.

The federal estate tax doesn’t affect the middle class—it applies only to the very wealthiest taxpayers. In 2009, any estate worth less than $3.5 million ($7 million per couple) will be passed on to heirs and heiresses estate-tax free. [Center on Budget and Policy Priorities] In fact, only one of every 300 estates is subject to the tax. [Center for Economic and Policy Research]

The idea that the estate tax hurts farmers and small businesses is a myth. The Congressional Budget Office found that the estate tax threatens almost no farmers or small businesspeople. [CBO] In fact, the American Farm Bureau Federation has never cited a single example of a farm having to be sold to pay estate taxes. [New York Times]

We can’t afford this enormous tax break for the rich. The total cost of permanently repealing the estate tax would average about $110 billion per year (including increased interest payments on the national debt). [Center on Budget and Policy Priorities] That’s more than twice as much as we pay for everyone’s Social Security benefits. [Social Security Administration]

America’s wealthiest families lobbied hard to abolish the estate tax. The campaign to repeal the federal estate tax was financed by 18 of the richest families in America—including 23 billionaires—who spent nearly $500 million to enact this special interest legislation. That’s because these families, which include the heirs of fortunes from Wal-Mart, Campbell’s soup, and Mars candy, stand to reap over $70 billion from the estate tax’s repeal. [Public Citizen]

Adapted from "Making Sense 2008" issue alerts, Campaign for America's Future. October 2008.

Corporate Taxes

Armand Biroonak — Tue, 09 Sep 2008 15:27:20 -0400

The Truth About Corporate Taxes

Hillary Hampton — Wed, 03 Sep 2008 10:11:23 -0400

Over a Quarter of Foreign Corporations Paid No Taxes