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Average taxpayers bear burden of low taxes on wealthy

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Last Updated on Tuesday, 29 April 2014 Published Date

(originally for the Butte Weekly) 4-23-14

                 The week of April 15, with attention focused on taxes, our corporate newspaper carried George Will’s editorial singing the praises of two House Republican plans to slash taxes on the oligarchy. Both would cut the top personal income tax rate from about 40 to 35 percent while slashing the corporate rate from 35 to 25 percent.

                Citizens for Tax Justice’s analysis of Dave Camp’s plan reveals big tax increases for average folks and lower taxes for the wealthy and corporations. CTJ writes: “Two-thirds of single parents would pay an extra $1,100 a year in taxes.” Paul Ryan’s tax reform reward millionaires in 2015 with a savings of $200,000. Robert Reich points out that even before such “reform” the richest 400 taxpayers are already paying at an average rate of 20 percent.

                Last year, Senator Max Baucus was buddy-buddy with Representative Camp during their summer pilgrimage to multinational corporate headquarters from coast to coast.  They publicized the 35 percent tax rate on our corporations as a reason we can’t compete globally. Of course these well-financed liars knew that the real corporate rate averaged 19.4 percent.  In fact, corporations enjoyed lower tax rates than the average “real person.”

                As another April 15th passes, we should remember the honor role of huge corporations, those “legal persons” who managed to avoid paying any federal income tax from 2008 through 2012. Citizens for Tax Justice lists 26 goliaths in all. Such names as General Electric, Boeing, Corning, Verizon, and Priceline.com should be familiar to most of us. Not only did these giants of patriotism and free market ideology pay no taxes, but they actually were granted rebates by our oligarchy’s obedient Congress --- $3 billion to GE, $535 million to Verizon, $202 million to Boeing, $10 million to Corning and Priceline.com. Think how many checks written by average taxpayers were required to ensure the deserving CEOs received their accustomed salaries of tens of millions.

                In the case of Boeing, there is a lesson on how a multinational can shift taxes from itself to a state’s average taxpayers. In 2003, a special session of the Washington legislature met to approve one measure, the Boeing bill. Washington had to outbid 19 other states to ensure that the new Dreamliner would be built in Everett. In a pressure cooker atmosphere, legislators approved a huge taxpayer funded subsidy package that was estimated to be worth $3.2 billion to Boeing through 2023. It included reimbursements for worker training, property tax forgiveness, low-cost loans, grants, tax credits and rebates, gifts of land, and exemptions from the state sales taxes.

                 Until 2003, the aerospace industry had been Washington’s biggest source of business tax revenue. With that vote, much of the industry’s tax liabilities disappeared. To make up for the revenue’s disappearance, gasoline taxes were increased, the state’s unemployment insurance program reduced, and workers’ compensation eligibility cut.

 

                Boeing has major operations in five states. In the period 2008 - 2012, its profits reported to the states were $20.4 billion. Its total state taxes were a rebate of $1,000,000. Its average state tax rate equaled zero percent.

                Lastly, Boeing’s tale has relevance to Baucus-Camp. Boeing’s foreign profits for the period 2008 - 2012 were $1 billion. It paid $323,000,000 in foreign taxes. Its average annual rate was 30 percent. Yes, Baucus-Camp boldly told us that our corporate tax had to be lowered if our firms were to be competitive globally. And there is George Will still passing along the lie.

                Cathy Siegner’s discussion of Caterpillar’s scam last week would make a representative Congress undertake real corporate tax reform. The legacy of the years of Baucus-Hatch Finance Committee tax deferrals for multinationals would be ended. There would be an end to US companies using post office box addresses in the tax haven Cayman Islands.

                Of course, these corporate “legal persons” sacrifice in other ways. They finance the world’s greatest lobbying industry, headquartered in our nation’s capital. And, as we our media constantly reminds us, they are “the job creators.” Just not in the United States.

                Elsewhere, this April saw the release of the Social Progress Index. It’s an academic compilation of studies of 132 nations in terms of 54 social and environmental indicators of livability. The US had the 2nd highest per capita GDP at $45,300. However, it ranked 70th in health, 69th in ecosystem sustainability, 30th in basic education, 34th in access to water and sanitation, 31st in personal safety.

                 There should be one of those roadside signs: “Your tax dollars at work!”

George Waring is a retired Montana Tech history professor.

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