How You Can Have a Billion-Dollar Income in America

[Squirrlnutz]

http://www.truth-out.org/how-you-can-have-billion-dollar-income-america-and-pay-no-taxes/1303410112

An interview with the author of Free Lunch, David Cay Johnston

[quote]When I was growing up, people joked about how much they hated taxes, but they paid them, and we had a solid middle-class society. Real wages rose from WWII through 1973.

Today one of our two major political parties -- nationally and in state capitals -- is unwilling to consider raising taxes no matter the circumstances. Though most of Washington's officials and media are hysterical about the deficit, and willing to hurt anyone in an effort to reduce it, both parties voted in December to extend tax breaks for the wealthiest Americans for two more years.

Despite profits of $14.2 billion -- $5.1 billion from its operations in the United States -- General Electric, the nation's largest corporation, did not have to pay any U.S. taxes last year. Its CEO, Jeffrey Immelt, recently replaced Paul Volcker as leader of President Obama's Economic Recovery Advisory Board as its name was changed to the Council on Jobs and Competitiveness.

David Cay Johnston worked as an investigative reporter for several newspapers, including the Los Angeles Times from 1976 to 1988, and the New York Times from 1995-2008 where he won a Pulitzer Prize for his innovative coverage of our tax system. He now teaches at Syracuse University College of Law and Whitman School of Management and writes a column at Tax.com. He is the author of two bestsellers, Perfectly Legal and Free Lunch. His next book, The Fine Print, will be published later this year.

Terrence McNally: When I last interviewed you on Inauguration Day 2009, I said, "Due to the scale of our multiple calamities, we may finally be ready to make meaningful changes to business as usual," and I read a quote from Rebecca Solnit: "Obama, who is merely impressive as an individual, is unstoppable as a phenomenon created out of the collective hopes and desires of the public, which must continue dreaming and prodding him forward to make the world we want to see." Your response?

David Cay Johnston: The last two years have demonstrated quite clearly that President Obama, like everybody else who gets a serious shot at being president, has to be acceptable to the establishment, and in particular, acceptable to Wall Street. While we continue to suffer from the serious problems left by the previous administration's policies, the responses have all been very focused on what Wall Street thinks are the solutions.

TM: Obama's first two years have made it clear that in the current system all presidential contenders ultimately represent their funders, and, given Citizens United, that will only get worse.

DCJ: Citizens United is an unbelievably important decision. I have research assistants gathering everything they can about the nature of corporations at the time of the Founders. Justices Scalia and Thomas in particular argue that their view of the Constitution is based on the original intent of the framers, not some amorphous modern idea, right?

DCJ: Under Citizens United, we have granted political rights to corporations, which are not natural entities. In 1977, Justice Rehnquist -- not exactly a raging liberal -- in First National Bank of Boston v. Bellotti, wrote that it was one thing to grant property rights to corporations in order to protect their property. This is what the Supreme Court did without hearing in the Santa Clara case in 1886 that created personhood for corporations. But he warned, you don't want to do this for political rights, because those belong exclusively to natural persons, i.e. human beings.

At the beginning of the republic, corporations were very tightly controlled: they could exist for a limited period of time to fulfill a specific purpose; they operated often only in a single state and were tightly regulated in every way. Today they can do anything they want to do, anywhere in the world. Citizens United is to the expansion of corporate power what the Big Bang was to the creation of the universe -- it is the whole universe.

TM: The corporation existed at the pleasure of the sovereign in England, and, of course, in the U.S., the sovereign is "we the people."

DCJ: At one time New Jersey was the state of choice for corporations; now it's often Delaware. Corporations have figured out how to take all their expenses in the states where they actually make a profit and claim all of their profits in states that don't tax them. By exploiting differences among the states, large corporations have figured out how to get all the benefits states provide -- like infrastructure, education, health care, and the criminal justice system --while bearing very little of the cost.

TM: We usually think of those services as existing for the good of a state's citizens, but they are absolutely essential for a corporation to function.

Let's frame the conversation in terms of three big questions. How is the tax system broken? What's the evidence? Second, how did it get broken? What's the history, what are the causes? Finally, how do we fix it? What are the solutions? What's the evidence that the tax system in the US is broken?

DCJ: Tax revenues have been falling even as the population and the economy expand. Even if you start with 2001 -- the first year of the Bush tax cuts and a recession year -- per capita income taxes in this country fell 32 percent by 2010. While the population grew by 8 percent, the total amount of money collected in individual income tax has fallen 27 percent.

The corporate income tax went from $187 billion in 2001 to $191 billion in 2010 -- adjusted for inflation. It grew 3 percent, but corporate profits in real terms grew about 25 percent during that time. Take into account population growth, and the corporate income tax fell 5 percent per person.

We live in a world in which knowledge is the most important driver of economic growth. Yet the state of New York just announced they're going to cut $800 million from schools. The state wants to save a few tax dollars today and forego huge amounts of tax dollars in the future, because the population will not be as well educated and won't make as much money.

TM: From a New York Times editorial March 20th: "Governor Cuomo [is] refusing to impose any new taxes or even continue a current surcharge on New York's wealthiest and least vulnerable citizens."

DCJ: Enormous fortunes are made in Manhattan, yet New York's top state income tax rate is half what it was a generation ago. It's been cut from 15 percent to about 7 percent, and the highest rate kicks in at a half a million dollars. People who make a half a million dollars a year pay the same tax rate as people who make half a million dollars a day -- and there are lots of them in New York.

TM: We now take in less taxes and grumble about it more while we face huge deficits for which most people's only solution is to make cuts.

DCJ: You will hear that the top 1 percent pay 40 percent of the taxes. It's not true. The federal individual income tax is only about one out of every five dollars of all taxes raised in America. We have federal taxes, state taxes, local taxes, payroll taxes, and I'm ignoring all the things that used to be covered by taxes that are now paid by fees -- three different fees for using the airport, surcharges when you rent a car, etc.

While it's true the top 1 percent are paying around 40 percent of the total income tax, in recent years they also have earned as much as 20 percent of the income -- 21 percent in 2008, the last year we have full data. Because their income has gone up vastly faster, the share of income tax paid by people at the top has gone up -- even though their rates have been cut.

It's important to recognize what's happened to incomes in America. More than half of the income in the top one percent goes to the top 10th of one percent -- one out of a thousand families in America. For every dollar they made on average in 1980, in the year 2008 they made $4, adjusted for inflation.

But in 2008 the bottom 90 percent of Americans earned on average a dollar and a penny for every dollar they earned in 1980. In 28 years, their average income went up 1 percent, $300 and change for the year, basically a dollar a day.

I did an analysis comparing 1961 incomes to 2007. The bottom 90 percent -- after higher income and social security taxes -- was making just a little bit more than they made in 1961. For each dollar in 1961, they made a dollar and twenty cents in 2007. The group at the top got $36.50 after tax per dollar they made in 1961. That's 180 times as much growth.

The top 400 taxpayers now make about a million dollars a day. We have redistributed income, through a variety of means -- suppressed unions; reduced taxes and tax deferrals to people at the top; encouraging owners to withdraw capital from their businesses, destroying jobs. In the bottom half, people are making less now than they did 30 and 50 years ago, when you adjust for inflation.

The Republican answer to this is the same answer that George Washington's doctors applied to him when he got sick: they bled him. When he didn't get better, they bled him more, and they ultimately bled him to death. Let's cut taxes for the rich and cut them for the rich and cut them for the rich, and the economy keeps getting worse. It's not true that high taxes destroy jobs. Low taxes destroy jobs by encouraging owners of businesses to withdraw money from the business.

TM: The small business owner that the tax-cuts-for-the-rich crowd claim to represent.

DCJ: Most small businesses don't pay taxes. They are designed not to earn a profit, but to draw down to zero so they pay no taxes. Maybe even have losses. Unlike a publicly traded company, where the goal is to report the biggest profits you can, to pump up the stock prices, and -- like GE -- still pay no taxes.

TM: In the Wall Street Journal March 22nd: "IRS Targets Rich Taxpayers. The rich not only face calls for higher taxes, they also face more audits to make sure they pay." And the article ends with this question: "Do you think the new tax force is welcome tax justice or capricious wealth redistribution?"

DCJ: In the late 1980s if you were a high income tax payer, your odds of being audited were about one in 11. They have been as low in recent years as one in 400. They're currently a little over one in 100, probably about one in 75. If you're in the $10 million-up crowd your odds are much higher, they're more like one in six. But the audit rates are still very low.

From interviews with dozens of IRS agents all over the country who weren't supposed to talk to me, it's clear many of these audits are superficial. They're told not to pursue things.

They were going to prosecute the IRS agent, Renee Welling in Encino, California, who stumbled across the backdated stock options scandal in 2004. The whole system came down on her head, simply because she said, "I'm not going to look the other way and let this company get away now and forever with a crime." In my book, Free Lunch, I said that the investors of America should erect a statue in her honor.

TM: Because she was actually putting some muscle behind the word audit.

DCJ: When a guy in San Francisco with a stellar 30-year career at the IRS was put in charge of collections, he announced that they were going to go after the elite and the politically connected with the same fervor they were going after Joe Six-Pack. He was literally put in a room with no windows and no computer and told to sit there day after day. They mucked up a charge to go after him because there was some pornography in his computer. Of course, 10 years ago you could just open an email and suddenly have all sorts of pornography exploding on your computer. Plus he had used his computer to help one of his subordinates find an inexpensive airfare. For this we should undo a 30-year career and discharge him in disgrace.

TM: There's some muscle in that audit!

DCJ: I was able to dig out that he went after the family of former Mayor Alioto of San Francisco and Al Davis, owner of the Raiders, among others.

TM: Let's talk about corporations. "60 Minutes" recently did a report on corporations fleeing the US to avoid taxes. Transocean, the company that owned the oil-rig in the Gulf spill, is one of many companies that claims to be located in Zug, Switzerland.

DCJ: The "60 Minutes" piece basically defended this, treating corporations as victims who had no choice.

TM: The segment's on the Web site at CBS (March 27, 2011). One of the heads of Cisco gets the most empathetic treatment. He says the corporate tax rate in the US is too high and we owe it to our shareholders to do this.

DCJ: My Pulitzer was for exposing this kind of stuff more than 10 years ago. If anything's changed, it's the skillful marketing of the idea that corporations are being abused.

We have chosen to have this global multinational corporate environment. Certain things are going to flow from that decision. One of them is falling wages. The most generous people in the history of the world are American blue-collar factory workers, who have given up their opportunity to get solidly into the middle-class so that the rural poor of China can have a better life.

Companies have figured out on the international scale the same thing that they previously figured out on the national scale: take your profits in Delaware even though you earn them in New York and California. Get all the benefits of being in the United States, and take your profits in Zug, Lichtenstein, the Cayman Islands, and Bermuda.

This is also a big problem in Western Europe, and it's growing in Japan. There was an effort more than 10 years ago by all the big industrial countries to harmonize their taxes, so they could ignore transactions designed to escape taxes. One of the very first acts of the Bush administration was to kill this.

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One out of every five banking deposits in the world is in the Cayman Islands -- except there's nothing there. The "60 Minutes" piece showed that Weatherford, a $10 billion a year company, rents a conference room so that they have an address in Zug, Switzerland.
TM: Like the folks who rent a mailbox as their corporate address because they don't actually have a company.

DCJ: Exactly the same thing.

Corporations are an effective, efficient means to run companies and build wealth. But, instead of them being the servant of everyone, we have instead made them our ruler. Much of the ownership of corporations is very fleeting. People in hedge funds who own a stock sometimes for a second have a greater voice than employees who expect to work there for years and customers who rely on the company for years.

The inevitable result is that we are pushing the burden of taxes down the income ladder. Today in every state, there's a heavier tax burden at the state and local level for four-fifths of families than for the top one 1 percent. At the federal level, a worker who makes the median wage, $26,000 -- half of all workers make more, half make less -- pays a heavier burden than the top 400 taxpayers who make almost a million dollars a day.

Then there are hedge fund managers who make billion-dollar incomes year after year in America and pay no taxes.

TM: They pay no taxes?

DCJ: That's right. The media says that they pay a 15 percent capital gains, but they only pay that when they cash out.

TM: If that's how you make your living, you don't cash out.

DCJ: John Paulsen made $9 billion in the last two years alone. If you've got $9 billion in your account, you go to your banker and say I need to borrow $300 million, and he loans it to you with an interest rate currently of less than 2 percent.

TM: Corporations have billions in profits sitting overseas, which they claim they'd bring home to help the American economy if they could get a tax break on it. Give us an amnesty for the good of the country. Talk about that.

DCJ: The driving force is the assertion that if they didn't pay any taxes, we'd all be better off. I can't tell you how many blue-collar and office workers have told me that their boss has said to them that if he or she or their company doesn't get a tax break, they're going to cut their wages.

I was at a conference sponsored by the people who own tax.com [where Johnston writes a column], a non-partisan non-profit that for 40 years has been fighting to make the tax system transparent and fair. All the talk was about lowering the corporate tax rate from 35 to 25 or 20 percent. And I said to the senior vice president of the US Chamber of Commerce, "If you think this is complex and difficult and unfair, why don't we get rid of the corporate income tax?"

We would have to have some rules about expense accounts and travel, etc., so that executives and owners of publicly traded businesses can't live off the company. But that's nothing compared to the complexity of what we have now. Let's just reduce it to zero, and raise the tax you pay on any money you take out of the business. This guy immediately dodged the question, saying he'd have to see the exact details before he could comment. The fact is, that wouldn't be popular with business at all, because they don't want to pay any taxes. There's a whole body of literature that says that the very wealthiest people should not pay any taxes because they create jobs.

TM: This obviously was the argument behind renewing the Bush tax cuts that both parties went along with in December, but it's clear that it doesn't work. If you give money to poor people they spend it, if you give money to state governments, they spend it, but the very wealthy are choosy about when and where and how they spend.

DCJ: I stumbled upon a Medicare tax database by accident one day that includes everybody in America who has a job and shows to the penny how much they get paid. It goes all the way up to $50,000,000, so I can tell you how many workers in America make $50 million a year or more. It was 72 in 2009 and 74 the year before, and on average they made over $80 million.

From the year 2000 to the year 2009, the median wage has been a little over $500 a week every single year. It grew six-tenths of one percent from 2000 to 2009. Even in the peak year of 2007, when the economy was doing well, it went up 2 percent. From 2000 to 2009, the average wage has gone up 2.2 percent.

The average wage is right around $39,000, or $750 a week. But that's all because of the growth at the top. 75 percent of workers make less than $50,000 a year, 99 percent make less than $200,000 a year. The growth is all in the group that makes $100,000 and up.

I'm old enough to remember that Richard Nixon once said that cleaning bedpans has the same dignity as the presidency. In Europe janitors and practical nurses make enough money that they can live a decent life, but not in America.

TM: Do workers in Europe make enough because they make relatively more or because the safety net of necessities is taken care of -- or is it both?

DCJ: It's both.

First of all, they have minimum income policies. Then there are many things paid for with the tax system there that you and I pay for with our after-tax dollars. While Europeans have lower incomes and higher taxes, they generally live better lives and they have more job security. Only in America, amongst modern countries, do people go bankrupt because of medical bills or do they die for lack of medical care. What we're doing is immoral.

I am shocked by politicians who spout their religious beliefs and then say universal health care is wrong. They are no different than people 100 years ago who said that if you wanted a child labor law you were an agent of the devil. It was God's plan that children work in the mills.

If we ran public schools the way we run the health care system, every kindergarten teacher would have to fill out a daily cost accounting report: I issued so many green crayons today, so many red crayons, so many paste pots, so many safety scissors to my kindergarteners. That's what we do with doctors. It is wasteful, it makes a few people very rich, and more than 1,000 people a day die for lack of health care.

TM: Our linking employers and insurance goes back to World War II when it was a way to get around price controls. Today it's an inducement to send jobs overseas.

DCJ: Overseas, the costs are on society's books, not on the company's.

Not only that, many people in America who have health care, have crummy health care. If the average worker in America had been shot the way that Representative Giffords was in Tucson, do you think they would have been put in a private jet and flown to rehab at the top place in Houston?

Fundamentally we have bought into the idea that we have to cut taxes on the rich or we will all be poor. We've been doing this now for 30 years, and the evidence is overwhelming that it hasn't worked.

Do we need to literally do what George Washington's doctors did -- bleed him to death --before we recognize we've made a mistake? Do we have to kill the country? Or at some point do we say, nobody else in the world is doing it quite the way we're doing it, and they're having better results. They have unions in most of Europe and Japan for all workers, and, in some cases for managers and low level executives. Why do we think the lone individual should have to negotiate with a giant corporation or a giant government, instead of doing it collectively as a group?

TM: You've been pouring out the evidence for years, and things only get worse. In terms of solutions it seems to me there's two questions: One, what would work? And two, what's it going to take to move in that direction?

DCJ: There's a theory that democracies don't self-correct until they've gotten into a really deep crisis, and I don't think we're yet nearly as bad off as we could be. But the developments in Wisconsin, Michigan and Ohio suggest that there is an awakening going on among many workers that their interests are under attack. Governor Walker tried to separate the police and fire departments...

TM: ...from the teachers and the nurses.

DCJ: The outcome of this will be very important. If Governor Walker, Governor Kasich and Governor Snyder succeed, then I think we're going to see a complete corporatization of the culture and worsening incomes for all but the top 10 or 15 percent of the population. There's a large movement in this country to end public education and public parks.

On the other hand, if there are recalls and this movement is stopped, I think you will begin to see a swing away from the very extreme positions based on corporate socialism, in which the government sets the rules in such a way that profits are privatized and losses are socialized.

The massive hidden subsidies to corporations that I exposed in Free Lunch might be wheeled back, and we'll begin to ask how to create a stable society that rewards people who play by the rules, reinforces virtuous behavior, and punishes vicious behavior.

What did Martin Luther King say? "I want my four little children to grow up in a world where they will be judged not by the color of their skin but the content of their character." We have instead created a society where you are judged by the presumed content of your wallet. That is no basis to sustain a society, none at all.

TM: You may have a society like that for a while, but it's not a social system.

DCJ: I don't argue that we don't want to have wealthy people. I'm somebody who went to work when I was 10 years old, full-time when I was 13, because my dad was a 100-percent disabled veteran of World War II. I'm a reasonably wealthy man today because I've been prudent and very lucky, and a lot of people helped me along the way.

I'm not objecting to money, but if you're going to make money, make it in the marketplace. Don't have the government pass a law that lets you borrow hundreds of millions of dollars and not have to pay it back. Don't do that. Let's recognize that you can't have a functioning society without police officers, nurses, librarians, and school teachers who are competent and educated. The foundation of private wealth is commonwealth, and we are systematically letting roads and bridges and dams fall apart, so that the already rich can have more and more. It's just not a smart strategy.

TM: You've also written about the role the media plays in this. This current system seems only possible with a failed media.

DCJ: I think it would go on even if the media were doing their job. Having said that, the media have done a crummy job for a couple of key reasons. First of all, most news is "he said" journalism. When you read that the president or John Boehner said something yesterday, that's one thing, but whether the journalist understands what it meant is a whole different question.

TM: And whether he checked if it were true or accurate is yet another.

DCJ: The first rule of journalism is check it out, The second rule is cross-check and cross-check, not just until you know all sides of the story, but until you also know where that story belongs, its importance and relative connection to other things. Those two rules have been breaking down as we have seen huge cuts in media.

Increasingly we're seeing coverage and unskeptical acceptance of talking points. Dean Baker runs a blog Web site called Beat the Press where every day he cites stories in the Washington Post, the L.A. Times, the Wall Street Journal and the New York Times, that have economic nonsense in them.

The far right understand that if you can polish an idea, you can sell it. Fifty years ago young men put Brylcreem in their hair because grease was supposed to make you sexy. They smoked cigarettes because ads said, "Four out of five doctors recommend Lucky Strike."

Absolute lies serve as ideological and economic marketing to help the already rich make themselves richer. Most journalists do not understand numbers and very few of them have ever taken even one course in public policy or statistics, so they get bamboozled every day of the week.

The odds have changed tremendously. The last time I checked there were 35,000 registered lobbyists in Washington, and a bunch of people who aren't registered. There are literally several tens of thousands of people in DC whose job is to influence congressmen and regulatory agencies. The tiny number of reporters out there are totally outgunned. On the other hand, they're also not skeptical enough. Journalists need to remember their job is to be skeptical. All around the world, in every lecture I give, I say, "First rule of journalism, check it out. If your mother says she loves you, check it out."[/quote]

[AmishBengalFan]

Yawn. I tuned out as soon as I read the expected Liberal "tax breaks for the wealthy" dogma in the first inch of this foot-long waste of screen space.

[Squirrlnutz]

[quote name='AmishBengalFan' timestamp='1303418975' post='985097']
Yawn. I tuned out as soon as I read the expected Liberal "tax breaks for the wealthy" dogma in the first inch of this foot-long waste of screen space.
[/quote]
Care to direct me towards alternative views?

[|Lucid|]

[quote name='AmishBengalFan' timestamp='1303418975' post='985097']
Yawn. I tuned out as soon as I read the expected Liberal "tax breaks for the wealthy" dogma in the first inch of this foot-long waste of screen space.
[/quote]

Regardless of how boring you think it is, it's still true. And it's not "liberal".. It's fiscal conservatism IMO. What's "liberal" is giving more tax cuts to the wealthiest individuals and corporations in a time of war and infrastructural decay.

[Jamie_B]

[quote name='AmishBengalFan' timestamp='1303418975' post='985097']
Yawn. I tuned out as soon as I read the expected Liberal "tax breaks for the wealthy" dogma in the first inch of this foot-long waste of screen space.
[/quote]


Yes because your still blind to the plutocracy

[Orange 'n Black]

Would have been a better read if it wasn't a transcript of a rambling conversation.

Anyway, the culprit is the tax code and always has been. The "super rich money grubbing America haters" have such a low effective tax rate because code loopholes and existing breaks allow them to. Liberals eviscerated Paul Ryan for proposing a 25% top income tax rate - but his plan would also have slashed the loopholes, effectively RAISING their taxes by ~10%. Not that I'm in favor of the 25%, pre-Bush 39% sounds plenty fair to me. Do people REALLY think the top 1% of American taxpayers are paying a 34% or even 25% EFFECTIVE TAX RATE? Shit no!

It's why GE had a zero effective tax rate too, through tax code sorcery. It is NOT, however, the company's evil machinations to screw the American people. OUR TAX CODE ALLOWS THEM TO DO IT! Between getting tax breaks for losses in the previous fiscal year and shuffling money through other countries, they got their rate, and it was LEGAL. GE's management has a responsibility to their shareholders to do so. I'm tired of the media and liberal squawking hounds going after the corporations, because it's beside the point. GE can't do anything that our tax code doesn't allow them to.

[|Lucid|]

[quote name='Orange 'n Black' timestamp='1303445214' post='985172']
Would have been a better read if it wasn't a transcript of a rambling conversation.

Anyway, the culprit is the tax code and always has been. The "super rich money grubbing America haters" have such a low effective tax rate because code loopholes and existing breaks allow them to. Liberals eviscerated Paul Ryan for proposing a 25% top income tax rate - but his plan would also have slashed the loopholes, effectively RAISING their taxes by ~10%. Not that I'm in favor of the 25%, pre-Bush 39% sounds plenty fair to me. Do people REALLY think the top 1% of American taxpayers are paying a 34% or even 25% EFFECTIVE TAX RATE? Shit no!

It's why GE had a zero effective tax rate too, through tax code sorcery. [b]It is NOT, however, the company's evil machinations to screw the American people. OUR TAX CODE ALLOWS THEM TO DO IT![/b] Between getting tax breaks for losses in the previous fiscal year and shuffling money through other countries, they got their rate, and it was LEGAL. GE's management has a responsibility to their shareholders to do so. I'm tired of the media and liberal squawking hounds going after the corporations, because it's beside the point. GE can't do anything that our tax code doesn't allow them to.
[/quote]


The tax code didn't spring up out of a void and just so happened to have these loopholes... Don't think big business and personal interest didn't come into play when this shit was written.

[Orange 'n Black]

[quote name='Lucid' timestamp='1303469860' post='985178']
The tax code didn't spring up out of a void and just so happened to have these loopholes... Don't think big business and personal interest didn't come into play when this shit was written.
[/quote]

Of course they did - but it's irrelevant. The more talking heads like this bleat on about the evil corporations and selfish rich people, the further their cheaply bought audience is dragged from the truth. It's easy to hate a faceless corporation considering our culture of finger pointing and passing the blame. Nobody, especially Capitol Hill, is willing to own up and admit the truth. America is at fault.

[Jamie_B]

[quote name='Orange 'n Black' timestamp='1303472901' post='985181']
Of course they did - but it's irrelevant. The more talking heads like this bleat on about the evil corporations and selfish rich people, the further their cheaply bought audience is dragged from the truth. It's easy to hate a faceless corporation considering our culture of finger pointing and passing the blame. Nobody, especially Capitol Hill, is willing to own up and admit the truth. America is at fault.
[/quote]


How is it irrelevant? I would say nothing could be more relevant.

[Jamie_B]

[url="http://www.rollingstone.com/politics/blogs/taibblog/talking-real-housewives-of-wall-street-with-eliot-spitzer-20110422"]Banker's Wives get "No Risk" loans[/url]

[Jamie_B]

How is this the people's fault? This very directly speaks to what our problem in this country is. If you want to argue that we need voters to educate themselves, Ill agree, but if you want to argue that the bankers are are absolve of any responsibility then I would say you've lost touch with the reality of this.

http://www.rollingstone.com/politics/blogs/taibblog/best-way-to-raise-campaign-money-investigate-banks-20110421

[quote]Best Way to Raise Campaign Money? Investigate Banks

A hilarious report has come out courtesy of the National Institute of Money in State Politics, showing that Iowa Attorney General Tom Miller – who is coordinating the investigation into the banks’ improper mortgage dealings – increased his campaign contributions from the finance sector this year by a factor of 88! He has raised $261,445 from finance, insurance and real estate contributors since he announced that he was going to be coordinating the investigation into improper foreclosure practices. That is 88 times as much as they gave him not over last year, but over the previous decade.

This is about as perfect an example of how American politics works as you’ll ever see. This foreclosure issue is a monstrous story that is somehow escaping national headlines; essentially, all of the largest banks in the country have been engaged in an ongoing fraud and tax evasion scheme that among other things has resulted in many hundreds of billions in investor losses, and hundreds of thousands of improper foreclosures. Last week, the 14 largest mortgage lenders a group that includes bailout all-stars like Citigroup, Bank of America and Wells Fargo, managed to negotiate a settlement with the federal government that will mandate some financial relief to homeowners who have been victims of improper foreclosure practices. It’s unclear yet exactly what damages and fines will be involved in the federal settlement, or how many homeowners will be affected. But certainly there are some who believe the federal settlement was a political end-run around the states’ efforts to extract their own deal from the banks.

Put it this way. If the banks had to pay what they actually owed – from the registration taxes/fees they avoided by using the electronic registry system MERS to the money taken from investors in toxic mortgage-backed securities to the fees and payments stolen from homeowners via predatory loan practices and illegal foreclosures – they would probably all go out of business. That’s how much money is at stake here: the very future of financial giants like Bank of America and Citi and JP Morgan Chase is hanging to a very significant degree on the decisions of politicians like Miller.

Hence the sudden avalanche of money sent Miller’s way. The numbers are laughable. In 2006, out -of-state donors gave Miller’s campaign $10,508. For the 2010 cycle, that number was $497,357. Three lawyers by themselves – Al Gore’s attorney David Boies, plus Donald Flexner and Robert Silver, all partners in the firm Boies, Schiller and Flexner – gave Miller a total of $60,000.

Guess who Boies’ firm defended last year, in a suit brought by an Australian hedge fund that claims it was ripped off in a deal involving toxic mortgage-backed CDOs? That’s right: Goldman, Sachs. Goldman hired Boies to represent it in a fight against the now-defunct Basis Yield Alpha Fund, which bought into Goldman’s notorious “Timberwolf” deal – one of the “shitty deals” Senator Carl Levin, in hearings last year, was haranguing Goldman for selling to unsuspecting clients.

So now we see that Boies and a string of other banker lawyers (including firms that represented Citi, Chase, Wachovia, and others) are throwing tens of thousands of dollars at Miller. Maybe it won’t do much to influence Miller, but who knows? Maybe he won’t plunge the knife in quite so deep now.

Just something to keep an eye on. It would be interesting to see a similar analysis on the money these same characters have thrown at the Obama administration in the last year.[/quote]

[Jamie_B]

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

[quote]Of the 1%, by the 1%, for the 1%

Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.

Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul. There are several reasons for this.

First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.

Third, and perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.

None of this should come as a surprise—it is simply what happens when a society’s wealth distribution becomes lopsided. The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.

Economists are not sure how to fully explain the growing inequality in America. The ordinary dynamics of supply and demand have certainly played a role: laborsaving technologies have reduced the demand for many “good” middle-class, blue-collar jobs. Globalization has created a worldwide marketplace, pitting expensive unskilled workers in America against cheap unskilled workers overseas. Social changes have also played a role—for instance, the decline of unions, which once represented a third of American workers and now represent about 12 percent.

But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.

When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s—a scandal whose dimensions, by today’s standards, seem almost quaint—the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. “I certainly hope so,” he replied. The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.

America’s inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window. There is no limit to the adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the “core” labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment—things workers care about. But the top 1 percent don’t need to care.

Or, more accurately, they think they don’t. Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”)—given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.

In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next? They are right to worry. These are societies where a minuscule fraction of the population—less than 1 percent—controls the lion’s share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.

As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.

Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.[/quote]

[CincyInDC]

http://blogs.suntimes.com/ebert/2011/04/the_one-percenters.html

Roger Ebert chimes in...

[Jason]

Personally I'm glad when a big corporation doesn't pay any taxes. Especially in a time of recession.

Corporations don't pay taxes. Their customers do. So all the money GE did not pay in taxes is additional money I don't have to spend on their products. Saves me money and lets me spend it on something else.

[CincyInDC]

"We told them we'd pass the savings on to them." kind of reminds me of this lie:

[img]http://images.cheezburger.com/completestore/2009/11/7/129021008687645509.jpg[/img]

[Jamie_B]

[quote name='Jason' timestamp='1303918127' post='986235']
Personally I'm glad when a big corporation doesn't pay any taxes. Especially in a time of recession.

Corporations don't pay taxes. Their customers do. So all the money GE did not pay in taxes is additional money I don't have to spend on their products. Saves me money and lets me spend it on something else.
[/quote]


Here is the flaw in your thinking.

Currently Wall St is making [b]RECORD[/b] profits, and yet Main St is still out of work.

Do you see how trickle down isnt working?

[Orange 'n Black]

[quote name='Jamie_B' timestamp='1303492759' post='985280']
How is this the people's fault? This very directly speaks to what our problem in this country is. If you want to argue that we need voters to educate themselves, Ill agree, but if you want to argue that the bankers are are absolve of any responsibility then I would say you've lost touch with the reality of this.

http://www.rollingstone.com/politics/blogs/taibblog/best-way-to-raise-campaign-money-investigate-banks-20110421
[/quote]

I'm not blaming it directly on the people and I'm not absolving the bankers of blame. It's quite obvious that the interests that devised our current tax code don't coincide with the interests of America's future. My point is that the OP article and all of the rhetoric flying around this issue is missing the real point. It spends all of its time looking for a bad guy to point the finger at while essentially ignoring the fact that our tax code is allowing this sort of thing to happen. You cannot fault the corporation for legally fulfilling its obligations to shareholders, however morally ambiguous the consequences might be.

The reaction does not surprise me in our litigation-happy society where astonishingly few entities (people or otherwise) are willing to assume responsibility both for their actions and the consequences of their actions. Our leaders would rather pick out a robber to tar and feather than fix the broken lock that allowed him into the house in the first place.

The situation is not directly the people's fault, but it severity has caused it to become our responsibility. [b]Nobody is immune[/b] from the consequences if the country's fiscal situation is allowed to continue spiraling out of control. The sooner the American people embrace that responsibility, the sooner we can force our leaders' heads out of the sand - or elect new leaders who will do the job correctly.

For the record, I am not in favor of corporations being tax-free but I do not believe they should be taxed at a significant rate. That's the point of a corporation - to avoid an excessive tax burden while conducting business. These corporations shuttle their money through overseas loopholes because domestic American tax is still significant. Reform the tax code for [b]all sources[/b] of federal revenue - corporate, income, sales, the lot of it - and create an American tax environment that is competitive with other industrialized nations. Corporations will trip over each other to reinvest in domestic operations.

[|Bengal Migration|]

[quote name='Orange 'n Black' timestamp='1303923961' post='986299']
That's the point of a corporation - to avoid an excessive tax burden while conducting business.
[/quote]

[quote]"Corporation. An ingenious device for obtaining individual profit without individual responsibility." Bierce, Ambrose[/quote]

That's the purpose of a corporation. Don't fucking kid yourself.

[Orange 'n Black]

[quote name='Bengal Migration' timestamp='1303974507' post='986628']
That's the purpose of a corporation. Don't fucking kid yourself.
[/quote]

Don't kid yourself, incorporation is absolutely essential to the modern global economy. If you are a major international manufacturing company (the kind we want to bring jobs back here), you are incorporated or you would have vanished in a puff of smoke when the global economy crashed. A corporation is granted many tax incentives that alleviate what would otherwise be a crushing tax burden that prevents them from conducting business. It is a tool of a capitalistic society, and though many LARGE corporations have made many morally questionable decisions, don't make the mistake of underestimating their use or importance.

My father is an independent distributor and is self-incorporated. He did so because this shields him from self-employment tax and allows him to deduct medical expenses along with several other benefits. With those extra tax burdens, he would not be able to conduct business effectively. And trust me, he's not a rich guy, but you won't find a stronger advocate for sensible (i.e. low) taxation of corporations in our country. Everyone cares more about GE paying zero income tax (claiming previous losses was a large part of it) than Ford moving their truck plants to Mexico because the tax here is too high.

Corporations produce jobs. Corporations follow the money. Corporations followed the money out of our country because our taxes are not competitive with other places they can produce. Solution? FIX THE TAXES! The majority of revenue from a corporation comes from taxes on the things they produce anyway. I'm thankful that we have a new Chairman of Commerce, Eric Schmidt, who understands this. Well-paying jobs are not going to appear out of thin air.

[Jamie_B]

We wouldnt have the problem of offshoring if we were still engaging in a tarrif system. Germany certainly doesnt have that issue.

Free trade fail.

[Orange 'n Black]

Here's a good article that gets at the heart of the issue. It's paramount to draw industries back inside our borders. Where we are passively letting them go, countries like China are actively working to keep them away by holding down the value of their currency. We must recreate the business-friendly environment that is part of the American ideal. And when unemployment drops, you will see revenues rise - because more people can now afford to buy things. We have the largest consumer base in the world, and both corporations and the federal government know it. We have a LOT of money to give them, but they need to give us reason and ability to do so.

http://prestowitz.foreignpolicy.com/posts/2011/04/26/what_america_makes_will_make_america

[quote]What America makes will make America
Posted By Clyde Prestowitz Tuesday, April 26, 2011 - 3:00 PM Share

As a boy living in Wilmington, Delaware, I often took the train to events in Philadelphia. As we passed through Chester, Pa., I often noticed a huge sign looming over the train station that said: "What Chester Makes Makes Chester."

In those days ( late 1940s early 1950s) Chester was a thriving production center that made everything from ships, and locomotives, to pianos. Today, the sign no longer stands over the station, which is only fitting in view of the fact that Chester no longer makes anything. It's no longer thriving either. In fact, it's one of the poorest towns in the country with soaring unemployment and drug addiction.

I thought of Chester yesterday as I read the New York Times front page story about how the economic stimulus being provided by the Federal Reserve's quantitative easing (buying of gobs of U.S. Treasuries in an effort to reduce interest rates and thereby spur investment, consumption, and jobs) is proving disappointing to economists who are now estimating that the pace of recovery from the financial crisis has actually slowed since November when the Fed initiated the program. The story quoted a number of economists to the effect that this kind of stimulus doesn't work very well in creating jobs.

Why not, I wondered. Could it be that, like Chester, America just doesn't produce much anymore so that no matter how low the interest rates are there's just not enough productive activity in which to make investments that would create jobs?

This line of thinking reminded me of the dinner discussion of eminent economists that I had attended last week at a prominent Washington think tank. I had been asked to make a few opening remarks on the issue of "how to make globalization work for America." I had noted that in today's global economy all the incentives are such as gradually but inexorably to move the production of tradable goods and the provision of tradable services out of the United States. The key such incentives are: [b]1) U.S. corporate tax rates far above those in most other economies, 2) a chronically over-valued dollar that results from the policies of many exporting economies that keep their currencies undervalued as a kind of export subsidy, 3) aggressive investment incentives such as capital grants, free land, free infrastructure, utilities cost abatement, no taxes for ten to fifteen years, and 4) conditioning of market access on establishment of production facilities in the subject market.[/b]

My remarks gave rise to a robust discussion in which several participants argued that U.S. manufacturing is maintaining its share of global production and criticized me for being too pessimistic about its future.

In truth, I had not been particularly focusing on manufacturing. The incentives that tend to draw manufacturing out of the United States also operate to draw the provision of tradable services out as well. The off-shoring of financial back office operations, software programming, and even such advanced medical procedures as the reading of brain scans is well known and well advanced. It so happens that U.S. based manufacturing production has been losing share of the global export market (Ernest Preeg, MAPI) over the past decade, but dynamics are similar whether we are talking services, manufacturing, design, or R&D. They are all moving abroad.

That's why the Fed is having difficulty creating jobs with its quantitative easing program. The lower interest rates it is fostering are not nearly enough to offset the incentives for off-shoring being offered by the likes of China, Singapore, France, and Israel.

Professional economists, especially macro-economists, don't like to face up to this reality for two reasons. First, to do so would be to acknowledge that the win-win, free trade globalization theory which they have long embraced is seriously flawed. Second, facing up would require getting into the real nitty gritty of economic development and job creation. It would mean descending from the macro-economic Olympus to the actual fields of production and of service provision to determine in which America can compete and what policies are necessary to enable these industries to compete.

In other words, it would require an economic strategy for making the things (broadly defined to include services, R&D, etc.) that will make America. [/quote]

[Jamie_B]

http://www.huffingtonpost.com/2011/03/02/corporate-tax-revenues-ne_n_830361.html

[quote]Corporate Tax Revenues Nearing Historic Lows As A Percentage Of GDP, Report Says

Even as the federal deficit has ballooned, U.S. corporations are paying lower tax bills than ever before, according to one measure.

That's the takeaway from a new report by the Center on Budget and Policy Priorities dissecting the tax structures of corporations, which CBPP Director Chuck Marr says are now paying taxes at "historical lows as a share of the [total] economy."

Marr points to a basic discrepancy: While the U.S.'s top corporate tax rate of 35 percent is one of the highest in the world, the amount corporations actually end up forking over to the government is much lower, sometime as low as 4 percent. This is due to a dizzying number of deductions, write-offs, and other accounting tricks that allow corporations to legally reduce their tax burden.

In 2007, the report notes, the Treasury estimated federal government had missed an opportunity to collect $1.2 trillion due to various corporate tax expenditures over the previous decade.

As New York Times columnist David Leonhardt columnist recently put it, a company like General Electric is, indeed, "expert at avoiding taxes."

Using statistics from the Office of Management and Budget, CBPP created this graph, mapping total collected corporate taxes as a percentage of the overall U.S. economy:
[img]http://i.huffpost.com/gen/253098/CORPORATE-TAXES.jpg[/img]

The report also notes that the current tax code is "industry-specific," meaning that some industries benefit more than others. Backing up that claim is the Congressional Budget Office, which estimates the effective marginal corporate-level tax rate to range from "29 percent on computer equipment to a negative 2.2 percent on petroleum and natural-gas structures."

The financial services industry is said to be taxed at 16.5%. The below graph shows how tax rates fluctuate widely by sector:
[img]http://i.huffpost.com/gen/253106/CORPORATE-TAXES-SECTOR.jpg[/img]

Finally, the report takes aim at the rapidly growing number of large businesses that are using their status as "S corporations, partnerships, limited liability companies, and sole proprietorships" to save on taxes. Here's CBPP's chart on this trend:
[img]http://i.huffpost.com/gen/253115/CORPORATE-RATES.jpg[/img]

You can read the entire report [url="http://www.cbpp.org/cms/index.cfm?fa=view&id=3411"]here[/url][/quote]

[Orange 'n Black]

What kind of corporate tax revenue is that article talking about? I assume it only references direct corporate income tax, which as I said before, [i]should be low.[/i] I note the precipitous drop in revenue on the graph right around 2008, where corporate income tax should have tanked because so many corporations were deducting losses. And note that those shareholders that hold stock in the U.S. paid tax on their dividends and capital gains if the corporation did not.

In this case, offshoring is also part of the problem because many of these corporations (GE) take their income in foreign countries then claim a U.S. foreign tax credit. In this fashion the U.S. tax code effectively gives its revenue away to foreign countries. Again citing GE, nobody notes that they did indeed pay income tax, but not to us. Their U.S. income liability was 0.

Revenue from corporations should be and nominally is based on sales tax, property tax, and other such taxes that encourage growth. International corporations are more than willing to flee to low-tax environments to conduct operations that would otherwise be taxed here. It is up to our leaders to create a tax environment that competes with other countries so that we can take back our revenue.