Today, a searing report on the 1%’s shameless avoidance of taxes and social responsibility. I would hope this report puts the kibosh on GOP and moderate Dems’ laments about increasing corporate and personal income tax rates. Enough is enough. Read on!
On Tuesday evening. twenty two folks joined me in a Less is More Book Club conversation. The report below came up, as it underscored one of the major themes of the discussion and of the book–the egregious greed exhibited by the 1% and their indifference to how much their extravagant lifestyles contribute to the looming climate catastrophe and gross wealth inequality in the US and the world.
I will be reporting more on the Book Club discussion either this weekend or next week, as everyone on the Zoom indicated that they would like to have a Less Is More Book Club Part II in July after more of the group could finish the book. Only three folks had completed the entire book, but after a rich discussion everyone on the Zoom indicated the desire to finish the book and to participate in another discussion. So, we will be scheduling a Zoom for mid July. That should give all of you the opportunity to read the book. Trust, it is that important.
The Shameless Greed of the 1%
Earlier on Tuesday, ProPublica, using leaked tax returns on thousands of wealthy Americans, published an explosive report outlining in great detail how the wealthiest Americans pay virtually nothing in taxes. Those exposed include Jeff Bezos, Warren Buffett, Bill Gates, Rupert Murdoch, Michael Bloomberg, George Soros, Elon Musk and Mark Zuckerberg. A New York Times piece, covering the report noted that this is hardly news and that the rich have been evading taxes since our country’s birth. From the Times:
After the country’s founding, the low-tax advocates generally won out — until the 20th century, when soaring inequality, two wars and the Great Depression led Washington to create the world’s most progressive tax system. Then the situation flipped again, and top tax rates have plummeted over the last few decades.
In colonial times, parts of the North taxed the rich more than Europe did, with Massachusetts going so far as to enact a wealth tax that covered financial holdings, land, jewelry and more. Southern colonies, by contrast, kept rates low and collection ineffectual, to prevent taxes from undermining slavery by eroding the wealth of slaveholders.”The New York Times: “The morning.”
Pulling from the ProPublica report:
- In 2007 and 2011, astronaut Jeff Bezos paid zero in taxes and in 2011 he reported so little income, he was able to claim a $4,000 child tax credit–he shamelessly took the credit;
- In 2018 Elon Musk paid federal taxes;
- George Soros managed to pay no taxes whatsoever three years in a row and billionaires Michael Bloomberg and Carl Icahn managed the same feat in recent years.
And that is just the tip of the iceberg. From ProPublica:
According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.
It’s a completely different picture for middle-class Americans, for example, wage earners in their early 40s who have amassed a typical amount of wealth for people their age. From 2014 to 2018, such households saw their net worth expand by about $65,000 after taxes on average, mostly due to the rise in value of their homes. But because the vast bulk of their earnings were salaries, their tax bills were almost as much, nearly $62,000, over that five-year period.ProPublica: “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax”
Ironically,last week I had found the fact sheet below from Americans for Tax Fairness and had planned to post it. It seems a fitting adjunct to the report above. We have much to do to fix this.
FACT SHEET: CORPORATE TAX RATES
From Americans for Tax Fairness, a fact sheet on US corporate behavior in the US. It tells a sordid tale of how the mega-corporations skirt US Tax laws, often to pay zero in taxes despite billions in profits. After a few jaw-dropping stats, Tax Fairness then counters the arguments foisted by lobbyists and industry for not raising taxes on the wealthy and corporations. Cringe on!
- Corporate share of federal tax revenue has dropped by two-thirds in 60 years — from 32% in 1952 to 10% in 2013.
- General Electric, Boeing, Verizon and 23 other profitable Fortune 500 firms paid no federal income taxes from 2008 to 2012.
- 288 big and profitable Fortune 500 corporations paid an average effective federal tax rate of just 19.4% from 2008 to 2012.
- Profitable corporations paid U.S. income taxes amounting to just 12.6% of worldwide income in 2010.
- U.S. corporations dodge $90 billion a year in income taxes by shifting profits to subsidiaries — often no more than post office boxes — in tax havens.
- U.S. corporations officially hold $2.1 trillion in profits offshore — much of it in tax havens — that have not yet been taxed here.
Some corporations pay nothing in taxes
- General Electric, Boeing, Priceline.com, Verizon and 22 other profitable Fortune 500 firms paid no federal income taxes from 2008 through 2012, according to Citizens for Tax Justice.
- 111 profitable Fortune 500 firms paid zero federal taxes in at least one of those five years.
- General Electric, one of the most notorious corporate tax dodgers, got $3.1 billion in refunds on $27.5 billion in profits from 2008 to 2012. The company paid less in federal income taxes in five years than a single American family pays in one year.
Lower tax rates do not boost growth and jobs
Conservatives claim reducing the corporate tax rate will substantially grow the economy. But a cut in the statutory rate from 35% to 25% would increase economic output by less than two-tenths of one percent, according to CRS. Economic growth over the past 60 years has actually been stronger when corporate tax rates were higher, according to the Economic Policy Institute. U.S. corporate tax rates also are not hurting profits — before-tax and after-tax corporate profits as a percentage of national income are at post–World War II highs.
There is no relationship between cutting corporate tax rates and job growth, according to a recent study by the Center for Effective Government. Twenty-two of the 30 profitable Fortune 500 companies that paid the highest tax rates (30% or more) from 2008 to 2010 created almost 200,000 jobs between 2008 and 2012. The 30 profitable corporations that paid little or no taxes over the three years collectively shed 51,289 jobs between 2008 and 2012.
A corporate tax rate cut will blow a hole in the budget
- Those who want to cut the corporate income tax rate from 35% to 25% ignore that it will cost $1.3 trillion over 10 years, according to the Joint Committee on Taxation. They say that rate cuts will be paid for by closing corporate tax loopholes, but this will be extremely difficult given the power of the corporate tax lobby. Even if it was possible, there would be no new revenue for investments or deficit reduction. America can’t afford that.
Americans don’t want to cut corporate taxes
Recent polling shows that the public feels strongly that corporations need to step up and contribute their fair share. For instance:
- By 79% to 17%, voters want to “close tax loopholes to ensure that American corporations pay as much on foreign profits as they do on profits made in the United States.”
- By 82% to 9%, voters believe that “reform[ing] the tax system by closing corporate loopholes and limiting deductions for the wealthy” should be used to “reduce the budget deficit and make new investments” rather than to “reduce tax rates on corporations and the wealthy.”
In solidarity and hope,
Paul & Roxanne