The Great Corporate Tax Shift, Part 3: Reversing the Corporate Tax ‘Race to the Bottom’

by Dr. Jack Rasmus

Jack Rasmus

Jack Rasmus

In parts 1 and 2 of this series on how US corporations have succeeded in avoiding paying taxes, the focus has been on how corporations have avoided paying taxes at the US federal level and on their corporate income earned abroad. The US federal corporate tax has been in freefall for decades. Elsewhere globally, there has also been a ‘race to the bottom’ between countries to see who can cut corporate taxes the most and fastest. In addition to the US federal corporate tax freefall and the global corporate tax ‘race to the bottom’ between countries, there has been a freefall and ‘race to the bottom’ between the 50 states in the US as well that’s been going on for decades.

The following Part 3 therefore briefly examines this within the US corporate tax ‘race to the bottom’, as state legislatures have in recent decades between competing to offer more tax cuts to corporations (and even ‘reverse taxation’–i.e. direct subsidies, awards, and payments to corporations), in an increasing state level desperate effort to lure business headquarters from another state to their own. The outcome is that US Corporations now pay on average a mere 2% or so in effective taxes to the US states as a group.

This Part 3 concludes with a short list of priority proposals for reversing the ‘Great Corporate Tax Shift’, at the federal level in the US, between the US and other countries, and between the US states. Continue reading

Fiscal Cliff: Obama ‘Doubles Down’ to Box-In Boehner’s Boys

by Dr. Jack Rasmus

Jack Rasmus

Jack Rasmus

Late Friday afternoon, December 28, President Obama held a press conference reporting on the status of negotiations on the so-called ‘Fiscal Cliff’. Having met with House and Senate Democrat and Republican leaders earlier the same day, in his press conference Obama reported both sides had made progress during the day toward an eventual deal. Senate leaders Reid and McConnell were in fact working on an agreement as he spoke, Obama noted.

Whatever Senate leaders Reid and McConnell may work out will almost certainly come to a Senate vote by December 31st. Less certain is whether the House of Representatives will allow a vote on the same Senate package to be taken by then as well. An ominous indication of what the details of the Senate version might be were hinted by Obama during his press conference, as he indicated the deal would require “the wealthiest to pay a little more” and that spending would be cut “in a responsible way”. Watch for an emphasis on ‘little’ with regard to taxes, and on ‘responsible’ meaning major spending cuts.

Should the House balk at voting on the forthcoming Senate proposal, Obama noted he was prepared to have Senate Democrat leader, Harry Reid, introduce a second bill, the outlines of which he, Obama, suggested before the Xmas holidays. That alternative bill would reintroduce the tax cuts for the 98% earning less than $250k a year, pass an extension of unemployment insurance, as well as other unspecified economic growth measures.

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Equity and Sensibility

by Leo Gerard

USW President Leo Gerard

A long time ago, in an historical America, lawmakers determined a progressive tax code to be the fairest and most logical for all.

The legislators asked more of those who had benefitted most from the advantages America provides. They asked less of those who benefitted least.

As time passed, the rich and wealthy corporations perverted the progressive tax code.  Now what America’s got is a flip-flop under which the fabulously wealthy pay taxes at rates lower than the middle class.

This week, President Obama proposed returning the tax code to a time closer to equity and sensibility. He asked that millionaires and corporations pay taxes at the same rate as the middle class. Not more, as they once did. But at an equal rate. It’s not revolutionary. It’s retro. And it would help create jobs.

It’s an idea whose time has come – again. And it should be implemented immediately.

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Fix Economic Crisis: Tax the Rich!

By Paul Krehbiel

Paul Krehbiel

The US government budget deficit is now $1.5 trillion, and most states are running out of money too. Political leaders are wringing their hands and crying in unison: “There’s just no money.” Led by Republicans, the only solution, they say, is to cut, cut, cut. They’re on a slash and burn rampage, pushing draconian cuts in education, health care, pensions, public workers, Social Security, Medicare and nearly every other needed social program and social service job.

Currently, Republicans have launched an all-out attack on unions – the one social group that has had the clout to achieve and protect these social programs. Wisconsin public workers are on the front lines in this battle. Scott Walker, recently elected Republican and Tea Party Governor, is out to crush public sector unions in Wisconsin, claiming their pensions are breaking the bank. Workers’ pensions are not the cause of the economic crisis hitting Wisconsin, nor are they in 44 other states.

Fortunately, Wisconsin’s unions and the public have responded with huge demonstrations at the state capitol in Madison, and Democratic lawmakers have left the state as of this writing to prevent the anti-people legislation from being voted on. But this is just the beginning. Republicans in Ohio, New Jersey and a host of other states are readying similar anti-labor legislation for their state houses.

How can there not be enough money in the richest country in the world for needed social services when practically every other industrialized country funds them? Actually, there’s tons of money. Billions and trillions of dollars. The problem is that it isn’t in government bank accounts because the giant corporations and the rich have taken it. The sales pitch from the Republicans and their financiers have turned this reality upside-down.

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We Pay Taxes, Most Corporations Don’t

by James Parks, Aug 12, 2008

Most corporations, including a large majority of foreign companies doing business in the United States, pay no income taxes, according to a report released today.

The Government Accountability Office (GAO) reported that two-thirds of both American and foreign companies doing business here end  up avoiding all income tax obligations to the federal government, despite corporate sales totaling $2.5 trillion.

According to the GAO, each year from 1998 to 2005, an average of 68 percent of the foreign companies operating in the United States paid zero federal income taxes. During the same period, 66 percent of U.S. domestic corporations paid no federal income taxes to the government. Continue reading