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 It’s a golden age for corporate profits. So why don’t our biggest corporations pay more taxes?

The brackets are set for the big dance — the dance around tax responsibility. Most of the teams are in the bottom bracket. In this league, the lowest score wins.

Outside the stadium our nation’s kids and seniors and low-income mothers may be dealing with food [3] and housing [4] cuts, but on the corporate playing floor new low-tax records are being set again this year. Just as this is a golden age for sports, this is also, as noted by the New York Times [5], “a golden age for corporate profits.”

Corporations have simply stopped paying their taxes, perhaps using the 2008 recession as an excuse to plead hardship, but then never restoring their tax obligations when business got better. The facts are indisputable. For over 20 years, from 1987 to 2008, corporations paid an average of 22.5% in federal taxes. Since the recession, this has dropped to 10% [6] – even though their profits have doubled in less than ten years.

Pay Up Now [7] just completed a compilation of corporate tax payments over the past five years, using SEC data [8] as reported by the companies themselves. The firms chosen are top-earners who have filed 10-K reports through 2012. Their US Tax figures represent the five-year total of “current” payments.

The 64 corporate teams paid just over 8% in taxes [7] over the five-year period.

The Slink Sixteen

General Electric: The worst tax record [7] over five years, with $81 billion in profits and a $3 billion refund. (more…)

Last week, President Obama described the sequestration situation in simple, stark terms: keep it in place and punch the middle class in the gut. Or, he suggested, soften the blow substantially by ending special tax breaks for the rich.

Here’s what he said:

“Republicans in Congress face a simple choice. Are they willing to compromise to protect vital investments in education and healthcare and national security and all the jobs that depend on them? Or would they rather put hundreds of thousands of jobs and our entire economy at risk just to protect a few special interest tax loopholes that benefit only the wealthiest Americans and biggest corporations?”

President Obama is recommending reducing the pain of sequestration by raising revenue. This could be accomplished by eliminating cushy deals that the rich and corporations have bought for themselves over the years with lobbyist dough.

It breaks down like this, specifically:

• Do Republicans want to evict 70,000 low income children from Head Start to ensure that the nation’s largest corporation, GE, which is massively profitable, continues to pay no taxes, in fact, demands rebates from the American people?
• Do Republicans want to furlough 750,000 civilians employed by the Army to ensure that one of the richest men in the world, Warren Buffett, can continue paying a lower tax rate than his secretary, a situation that Buffett has described as unconscionable?

(more…)

Do you remember the last time the unemployment and job numbers were published? Do you remember that former GE CEO Jack Welch blasted the Bureau of Labor Statistics (BLS) for political bias because the numbers showed a sudden and significant drop in unemployment to 7.8 percent or two tenths of a percent below the critical 8 percent threshold?

Do you remember that Jack said the movements then reflected in the numbers were impossible and that the way the numbers were collected and calculated was illogical and basically said the political fix was in?

Well the numbers came out again Friday morning. They show an increase of 175,000 jobs but also an increase in the unemployment rate from 7.8 to 7.9 percent. Now at first glance that seems a little odd. Jobs are increasing and the unemployment rate is rising? (more…)

Allow me to point and link you to two pieces in Sunday’s NYT. I don’t have time to give them the treatment they deserve — off to CA for the Milken Institute Global Conference where I’ll be debating tax reform and the role of budget deficits so more to come on those issues.

The first article is about all the machinations Apple goes through to cut its tax bill (their effective rate is under 10 percent, according to the piece). This is a well-known story — journalists Jesse Drucker and David Cay Johnston have also done yeomen’s work in this space as well. But the NYT piece added an important dimension by discussing some of the granular costs of the revenue losses to localities in Apple’s backyard.

A mile and a half from Apple’s Cupertino headquarters is De Anza College, a community college that Steve Wozniak, one of Apple’s founders, attended from 1969 to 1974. Because of California’s state budget crisis, De Anza has cut more than a thousand courses and 8 percent of its faculty since 2008.

Now, De Anza faces a budget gap so large that it is confronting a “death spiral,” the school’s president, Brian Murphy, wrote to the faculty in January. Apple, of course, is not responsible for the state’s financial shortfall, which has numerous causes. But the company’s tax policies are seen by officials like Mr. Murphy as symptomatic of why the crisis exists.

“I just don’t understand it,” he said in an interview. “I’ll bet every person at Apple has a connection to De Anza. Their kids swim in our pool. Their cousins take classes here. They drive past it every day, for Pete’s sake.

“But then they do everything they can to pay as few taxes as possible.”

Something very absurd — though not illegal — is going on here but we knew that already. The fact that U.S. foreign profits held in Bermuda and the Cayman Islands amount to between 550 and 650 percent of those countries GDP is a pretty strong hint that something’s awry, as is the “double Irish with a Dutch sandwich” move decribed in the piece (it’s just a very effective way to shelter profits earned in higher tax countries by assigning them to low-tax havens). (more…)

When GE’s CEO Jeffrey Immelt was appointed to head his administration’s competitiveness council, President Barack Obama said, “We think GE has something to teach businesses all across America.”

Even in the summer heat, that’s a bone-chilling thought to an anxious cross-section of employees from engineers all the way down to the janitorial staffs who still take pride in being part of GE’s X-ray business division in Waukesha, Wis.

GE announced on Aug. 22 that it would close its X-ray division headquarters in Waukesha, Wis. and move to China. Reports are that GE has hired 100 engineers to staff the China office. This is an ironic development since deputy White House press secretary Josh Earnest reported from Martha’s Vinyard that President Obama and Immelt were discussing how to increase the number of engineers who graduate from U.S. colleges and universities.

Anne LeGrand, vice president and general manager of GE Healthcare Global X-ray division, told the Wall Street Journal that the company expects to develop 20 to 25 percent of the division’s products in China during the next three to five years. (more…)

 
Celebrate Labor Day.  Really, celebrate. It’s important.

Wear a t-shirt announcing to the world the name of your union and march in a parade, chanting and whooping it up about how glad you are to belong to an organization whose members are devoted to looking out for each other. If you’re among those without a union, proclaim your profession and declare your pride in the hard work you do. Make some happy noise. Infect your fellow marchers with your zeal.

Invite your most beleaguered neighbors, friends and co-workers over for a picnic. Raise a pint, braise some burgers and praise your companions for their skill, devotion and compassion. Recognize them for all they’ve persevered through since this relentless recession began in December of 2007.  Build esprit de corps among your fellow workers.

This is one day devoted to labor, to the middle class, to the majority. One day out of 365. On this holiday, everyone gives an obligatory nod to workers. So don’t fret this Labor Day. Don’t waste it away in apathetic doldrums. Don’t let the minority rich and their purchased politicians take this celebration away from us too.

Some, including former Labor Secretary Robert Reich, have called for protests on Labor Day. They say workers must use this opportunity to demand that Washington solve the real crisis debilitating this country – dogged joblessness.

Reich is right. But it’s too early for that. Ultimately, workers must flip this ugly situation upside down so that once a year it’s Rich People’s Day. Once a year, the middle class gives the frivolous Kardashians and tax-shirking GEs of the world an obligatory nod. But every other day, 364 days a year, is labor day. (more…)

In case you haven’t noticed, Republicans hate unions. Unless all workers in this country are unionized, don’t expect the Republicans to stop trying anything in their campaign against working people.

If GE had not been unionized, I would have starved to death. One of my sisters did starve to death; another almost died, and I just barely made it. I, along with seven other scientists and engineers, tried to unionize the GE Naval Reactors scientists and engineers during 1973. We almost won. We lost by about 575 to 535. With any help from the IUE we would have won.

John Shannon
Saratoga Springs, N.Y.
Retired Nuclear Physicist/Nuclear Engineer
Son of one of the first members of the IUE local located in Schenectady, NY.

By Jim Hightower
Author, radio commentator, America’s number one populist

Here’s the hot new phrase in Washington: “shared sacrifice.” Sounds nice, but it’s really just code for gouging the middle class and the poor.

Republican budget whackers use the phrase like a war cry as they slash Medicare, education, and every other public program they hate. President Obama, too, has taken to uttering the phrase as he surrenders to the contrived wisdom in Washington that every American must give up even essential government benefits in order to balance the budget. But guess who’s not sharing? The corporate powers, which use their lobbyists, lawyers, campaign cash, tax havens, and other tools to avoid giving up anything in the call for national sacrifice.

For example, while hundreds of thousands of schoolteachers are being dumped and our school children shortchanged in sacrifice to the Deficit Gods – it was recently revealed that General Electric is a sacrifice-free corporation. With more almost 1000 tax lawyers and other specialists in its tax department, this infamous polluter and job-cutter has paid exactly zero in income taxes since 2006, despite raking in $26 billion in profits. Indeed, its army of sacrifice avoiders produced a $4 billion tax refund for GE in those five years. Meanwhile, it continues to be rewarded with billions of dollars a year in government contracts. (more…)

Restoring U.S. domestic industry and jobs will require major U.S. initiatives.

That’s the main focus of the new Jobs Council chaired by GE CEO Jeffrey Immelt.

But he also needs to be alert to current U.S. government actions that can add to the huge challenge he already faces. He must try to restore thousands of closed factories and millions of  lost U.S. jobs. But a severe new threat is the KORUS FTA -The Korea – U.S. Free Trade Agreement that’s nearing final approval in Congress. It’s the last thing America needs at this time of crisis. Mr. Immelt has said nothing about it pro or con.

The following is a partial list of the provisions in this disastrous one-sided  agreement favoring Korea that vigilant Americans should protest now, including those with major clout and strong reasons like Mr. Immelt.

1. The KORUS FTA will export jobs and increase our trade deficit. We’re being promised by some that the KORUS FTA will create more American exports, but in reality it will only export American jobs. According to the Economic Policy Institute’s estimates, in the first seven years, the agreement will cost as many as 159,000 American jobs and increase our trade deficit by $16.7 billion. Others have said it would create 70,000 jobs (but mainly low-paid Americans working for foreign-owned companies at less than half what the lost jobs paid).

2. Prevention of takeovers of U.S. companies is greatly inhibited. Foreign monopolies will have more freedom to take over whole U.S. industries.

3. Korea will be able to in-source low wage jobs to its factories in the U.S., but American companies will not get the same access to South Korea.

4. South Korea will still be able to use barriers to trade that the U.S. doesn’t have, such as special tax breaks and subsidies. Korea has a 10 percent value added tax, while we give them tax-free access to our markets.

5. There is nothing in the KORUS FTA to stop South Korea’s often-used currency manipulating practices. We know how much admage that can cause from our experience with China.

Either our leaders aren’t reading what they’re signing or they’re being lobbied by special interests working against the most dire needs of the United States.

Kenneth N. Davis Jr.
President, Economic Strategy Associates, Inc.
Stamford, Ct.
Former U.S. Assistant Secretary of Commerce
Former IBM Corp. vice president and chief financial officer
Former investment banker

***

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By Leo W. Gerard
USW International President

The nation’s greedy corporations and insatiable wealthy are fattening themselves on workers. There’s no trickle down. It’s the opposite; the rich have been sucking the economic lifeblood from the middle class for decades.

When reckless Wall Street banksters get taxpayer-funded bailouts, billionaires get tax breaks and gigantic corporations like GE and Bank of America pay absolutely no federal income taxes, they’re getting for free the very public services that enable them to make massive profits in this country – the courts, the roads, the trade regulators, the patent enforcement.

The middle class doesn’t get those big time special deals and loopholes. Workers pay their taxes. As a result, it’s workers footing the bill for the government services that enrich the rich. Greedy corporations, their CEOs and the right-wing politicians they buy with tens of millions in campaign cash are freeloaders.

It’s time workers stood up to the freeloaders. Join Monday’s We Are One rallies. These demonstrations across the country by religious groups, social justice organizations and labor unions will illustrate that the middle class is mad as hell and not going to take trickster economics anymore.

It’s time for greedy corporations and the insatiable rich to pay their fair share. It’s time to stop cuts to the government programs most treasured by and vital to the middle class and the vulnerable in this country – education, public transportation, Social Security. It’s time to stop right-wing attempts to terminate democratic rights like collective bargaining and voting without harassment. It’s time for the middle class to stop paying for everything and for the insatiable rich and greedy corporations to start sharing the sacrifice required to recover from the economic crisis caused by reckless gambling by Wall Street bankster corporations.

March for your rights Monday. March for the middle class facing record rates of foreclosure, unemployment, child poverty, and loss of opportunity as country club conservatives cut off college loans and Head Start.  March for the right of college students to register and vote in the towns where they study. March for the right of workers to band together, elect representatives and bargain with employers for better pay and working conditions. March for the right of the people to insist that corporations pay at least the same rate of taxes as workers do. March to end tax breaks for the wealthiest one percent who have now acquired more wealth than all the workers in the bottom 90 percent.

Greedy corporations, the insatiable wealthy and their purchased politicians have for three decades skewed public policy to enrich themselves while pushing down wages and benefits for the middle class.

From 1947 to 1975, a time of strong unionization in the workforce, real wages of average workers increased with productivity. The 75 percent rise in productivity and the nearly matching rise in wages gave the United States the largest, most vibrant middle class in the history of the world.

Since 1978, productivity grew 86 percent, but compensation for workers grew only 37 percent, and if the cost of benefits, mostly uncontrolled health insurance increases, is removed, the real average  hourly wage did not rise for 35 years, according to Alan S. Blinder, professor of economics and public affairs at Princeton University and a former vice chairman of the Federal Reserve.

Here’s how it works: The nation’s largest corporation, General Electric, earns tens of billions in profits from the labor of its workers but refuses to share the benefits with them. GE is expected to demand that its 15,000 unionized U.S. workers accept benefit cuts. So they’ll pay more for their retirement and health care and have less money to live and to pay taxes.

Meanwhile, the share of national income captured by the richest one percent rose from 8 percent in 1975 to 23.5 percent in 2005.

Under Dwight D. Eisenhower, the president in the 1950s, the nation’s richest paid an effective tax rate of 70 percent after loopholes. Today, it’s 16 percent – significantly lower than the 25 percent forked over through payroll deductions by individual workers earning between $34,500 and $83,600 a year.

That resulted from deliberate policy changes. Beginning with Ronald Reagan, country club conservatives cut taxes for the wealthy, while at the same time ending routine minimum wage increases and undermining the bargaining rights of labor.

The changes were made by increasingly wealthy politicians increasingly influenced by lobbyists. For example, 60 percent of the freshmen in the U.S. Senate and 40 percent in the U.S. House are millionaires. By contrast, only 1 percent of Americans are worth more than $1 million.

Compounding that is corporate influence, which worsened last year when the U.S. Supreme Court enabled corporations to donate unlimited money in secret. The upshot is corporations like General Electric, spending millions to lobby and paying zero in federal income taxes. GE spent $200 million to lobby for loopholes in the federal income tax code over the past decade, made $26 billion in American profits over the past five years, and not only paid absolutely no federal income taxes, but got itself a $4.1 billion rebate from the IRS.

That is far from an anomaly. Two out of every three U.S. corporations paid no federal income taxes from 1998 through 2005, according to a report by the Government Accountability Office. And the situation hasn’t improved since then. U.S. Sen. Bernie Sanders has written repeatedly about tax avoidance by the likes of Bank of America and Goldman Sachs, Wall Street banks that former President George W. Bush handed hundreds of billions in bail out dollars.

Bank of America got a $1.9 billion tax refund from the IRS last year, even though it made $4.4 billion. Goldman paid only 1.1 percent in federal income taxes on its $2.3 billion in profits. New York Times reporter David Kocieniewski wrote in his story about GE that such tax dodging by corporations has resulted in a significant decline in federal revenue from corporations –  from 30 percent in the 1950s to 6.6 percent in 2009.

Tax avoidance is a virtuous cycle for greedy corporations and the wealthy. They pay less in taxes, then have more money to lobby politicians to lower their taxes. In fact, it’s gotten so bad that lawmakers are hiring lobbyists right from their K Street firms to write legislation. And Congress’ new right wingers are increasing this trend. Since they took office in January, nearly half of the 150 former lobbyists working in top policy jobs in Congress were hired.

For workers, however, it’s a vicious cycle. They’re forced to pay the taxes shirked by greedy corporations and the insatiable wealthy. And they’re forced to suffer service cut backs.

Right now, right wingers are trying to cut $51.5 billion from the federal budget – demanding elimination of programs essential to the middle class and poor such as subsidies for home heating for the impoverished. But if the wealthy paid their share, say hedge fund manager John Paulson who earned $2.4 million an hour in 2010 – then those cuts would be unnecessary because the federal government would have an extra $69.5 billion in revenue.

Forty-three years ago on April 4 Martin Luther King was assassinated after standing up for the right of public sector workers in Memphis, Tenn. to negotiate for better lives.

In his last speech, Rev. King said God had allowed him to go to the mountaintop where he’d looked over and seen the Promised Land. “I may not get there with you,” he cautioned, “But I want you to know tonight, that we, as a people will get to the Promised Land.”

Greedy corporations and the wealthy have made it to the mountain top. And they’re shoving American workers down the hillside to ensure the Promised Land is reserved only for the richest.

The promise of America democracy is equality. Equal rights, equal treatment under the law, equal opportunity. Freeloading by greedy corporations and the insatiable wealthy is denying those promises to the vast majority of citizens. Americans must unify and march to wrest back those rights and secure the American Dream for all.

Take a first step. Join one of the 600 We Are One demonstrations on April 4.

***

Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama recently appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. He serves as co-chairman of the BlueGreen Alliance and on the boards of the Apollo Alliance, Campaign for America’s Future and the Economic Policy Institute.  He is a member of the IMF and ICEM global labor federations and was instrumental in creating Workers Uniting, the first global union.