By Sen. Bernie Sanders
Independent U.S. Senator from Vermont
When the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. They just loved their country – and the willingness of the American people to provide them with the largest bailout in world history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion in virtually zero interest loans and other financial assistance came from the Federal Reserve. America. What a great country.
But just two years later, as soon as these giant financial institutions started making record-breaking profits again, they suddenly lost their love for their native country. At a time when the nation was suffering from a huge deficit, largely created by the recession that Wall Street caused, the major financial institutions did everything they could to avoid paying American taxes by establishing shell corporations in the Cayman Islands and other tax havens.
In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.
On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country. That has got to change. (more…)
In a televised panel discussion yesterday, AFL-CIO President Richard Trumka handily put Mitt Romney’s economic polices into perspective: stale and failed.
Countering comments by Romney economic adviser Vin Weber that corporate taxes need to be lowered and deregulation pushed forward, Trumka noted that George W. Bush followed that same prescription with the result that after his eight years as president,
there were fewer jobs in America when he left office then when he came into office. If those were such a great prescription, why did they almost destroy the economy?
Trumka also challenged the prevalent Washington, D.C., notion that there is no money available for such essentials as improving our nation’s crumbling infrastructure.
Corporate America has made two years of record profits, they paid the lowest share of taxes of GDP (gross domestic product) that we had in centuries. The money is there. It’s allocating the money, setting priorities. We’re still the richest nation on the face of the earth.
Everyone else has figured out how to do it, Trumka said, and our country can as well,
if we sit down and decide to put the country first. (more…)
Robert Borosage
Co-Director Campaign for America's Future
“I believe for every drop of rain that falls,
A flower grows.”
-Tom Jones
“I believe that for every tax that is cut,
The deficit falls.”
-Mitt Romney
Mitt Romney’s victories in Michigan and Arizona establish him as the presumptive Republican presidential nominee. Now his actual views deserve more serious attention than they have been accorded in the Republican primaries, where he has benefited by appearing less nutty than the competition.
Romney claims that he has a plan for “more jobs, less debt and smaller government.”
He also says that he has the “integrity” to “speak honestly with the American people.”
But his “plan” simply doesn’t add up. He wants to lower taxes, raise spending on the military, protect Social Security and Medicare for a decade, and cut $6 trillion out of spending to balance the budget. He gets there only by projecting fantastical rates of growth and using magic asterisks to indicate cuts or loophole closings that he isn’t prepared to reveal. (more…)
The Treasury Department said Wednesday that it hopes to reduce the overall corporate tax rate from 35 percent to 28 percent, but avoid losing any tax revenue by closing a host of unspecified loopholes that allow companies to avoid paying the full rate. But the deal would be slightly sweeter for companies that manufacture goods in the United States, with the Obama administration vowing to reduce the top rate to 25 percent.
Obama would bring down the rate for manufacturers by tweaking a tax break that is frequently touted by its proponents as the “manufacturing deduction,” which allows companies to skirt some taxes on profits that come from producing goods in the United States.
“Anytime you’re going to increase the deduction for manufacturing activity in the U.S., that’s a good thing, that’s an insourcing incentive,” said Scott Paul, executive director of the Alliance for American Manufacturing, a coalition between the steelworkers’ union and corporate manufacturers. “That’s something that’s going to encourage companies to produce things here in the United States.” (more…)
Posted
October 22, 2008 at 9:18 am,
in
From the News
By David Sirota
Author of “The Uprising: An Unauthorized Tour of the Populist Revolt”
Last week, I appeared on Fox News to discuss Barack Obama’s tax proposals. You can watch the clip here – and make sure to watch the end where Fox News tries to drown me out with music.
Not surprisingly, the “debate” centered around the false premise that Obama’s tax cuts are actually welfare. I say that’s false because – as I pointed out on the show – everyone pays some form of taxes, whether it’s income, property, sales or payroll taxes. When you take all those taxes together, most working- and middle-class Americans pay a higher effective tax rate than the Warren Buffetts of the world (as Warren Buffett, by the way, readily acknowledges). So Obama’s plan to pass refundable income tax credits is only a handout if you look exclusively at one slice of taxes – in this case, income taxes. But in the overall tax scheme, those tax credits are aimed at better equalizing the tax structure so as to diminish the gap between Warren Buffett’s very low effective tax rate and Joe Sixpack’s high effective tax rate. Only in the asylums of Fox News and Republican Party politics is reducing that effective tax rate gap billed as theft from the rich to finance “welfare.”
This concept of effective tax rates (ie. the tax rate actually paid and enforced) is key to understanding the most telling part of this Fox News discussion – the part at the end where former Bush-Cheney spokeswoman Jennifer Millerwise Dyck parrots McCain campaign talking points about America supposedly having a very high corporate tax rate in relation to the rest of the world. This, says Dyck and fellow Republicans, is driving businesses to move offshore.
It sounds like a credible storyline, especially considering that officially, our corporate tax rate is somewhere between 35 and 39 percent. But, as always, the devil is in the details.
To know how high – or low – the effective tax rate is, you have to go beneath the top-line rate and account for all the loopholes, subsidies and write-offs – and the way to do that is by looking at corporate tax revenues as a percentage of a country’s GDP. That way, you know how much corporations are actually paying as a share of your overall economy – in other words, you know the real corporate tax rate, not the fake one advertised by top-line numbers. And when you look at America’s tax structure through this lens, you see that even the Bush Treasury Department admits we have the second lowest effective corporate tax rate in the industrialized world (see page 42 of this report).
Indeed, this explains the dissonance between Republican claims of “highest corporate income tax rate in the world” and the recent Government Accountability report showing that most corporations pay no corporate income taxes at all. The latter is the truth – most corporations don’t pay any taxes because of loopholes, writeoffs and subsidies that allow them to effectively reduce that 35 percent corporate tax rate to zero. In fact, many profitable corporations actually collect tax rebates. But as I told Fox News, we don’t hear criticism of that kind of “corporate welfare” from the Republican mouthpieces deriding Obama’s middle-class tax cuts as welfare.
As you can see from the video clip, when the GOP parrot I’m debating throws out the standard “high corporate tax” canard, I revert to the actual facts over and over and over again, to the point where Fox News feels the need to drown me out with music at the end. And I was, of course, rewarded with the usual river of hate email from Fox News viewers, most of which reaffirmed the dittohead nature of the modern conservative audience in that almost every email included exactly two links purportedly “proving” the GOP talking point – one a link to U.S. News and World Report’s right-wing business columnist, the other to the fringe Tax Foundation, a group funded by Scaife, Koch and the usual constellation of Wingnuttia’s trust-fund babies. You’ll notice that both of these sources focus only on the official tax rate, not the effective tax rate – deliberately misleading their readers about the facts.
The good news is that polling shows most Americans do not think the big problem facing our country is that wealthy corporations are oppressed by high taxes. That is, most Americans live in the “reality-based” world and understand that if anyone is winning big from the Bush-McCain tax policies, it is Corporate America and the super-rich. So if the GOP wants to attack Obama for trying to cut 95 percent of America’s taxes – if they want to lash their electoral hopes to a promise to give Big Business another tax handout – then I say that’s great. They are helping progressives build a landslide and an election mandate.
