Corporations are laughing at taxpayers

Ralph Nader

Ralph Nader
Madison Online

The all-consuming wrangling over debts and deficits, spending and taxing is excluding a large reality of how these financial problems can sensibly and fairly be addressed. These blinders in Congress and the White House come from fact-starved ideologies — mostly from the Republicans — and fear-fed meekness — mostly from the Democrats. Both are furiously dialing for campaign cash.

Take the gigantic world of corporate tax avoidance. Ronald Reagan signed the Tax Reform Act of 1986, designed to increase corporate tax revenues by over 30 percent. Today, President Obama wants to diminish or delete some tax loopholes (technically called tax expenditures) for large corporations, but let most of the revenues be canceled out by lowering the corporate tax rates. How the world changes.

Obama’s mild approach is unacceptable to the big business lobbies and their Republican mascots in Congress. They want more tax breaks.

Lost in this whirl of vast greed and political calculation are options that, if pursued with a sense of fairness, would go a long way in providing revenues for public works jobs to repair America, which in turn would generate more consumer demand by these workers.

The ultra-accurate Citizens for Tax Justice publishes precise reports on the effective taxes paid by corporations, which make a mockery of the 35 percent statutory tax rate for corporations.

On June 1, CTJ released a preview of its forthcoming study of Fortune 500 companies and “the taxes they paid — or failed to pay — over the 2008-2010 period.” This report should silence those who say that the U.S. taxes corporations more than other industrialized nations.

CTJ reports that from 2008 through 2010, 12 big corporations — American Electric Power, Boeing, Dupont, Exxon Mobil, FedEx, General Electric, Honeywell International, IBM, United Technologies, Verizon Communications, Wells Fargo, and Yahoo — reported $171 billion in pretax U.S. profits, but “as a group, their federal income taxes were negative: $2.5 billion.”

CTJ documents that “not a single one of the companies paid anything close to the 35 percent statutory tax rate. In fact, the ‘highest tax’ company on our list, ExxonMobil, paid an effective three-year tax rate of only 14.2 percent … and over the past two years, Exxon Mobil’s net tax on its $9.9 billion in U.S. pretax profits was a minuscule $39 million, an effective tax rate of 0.4 percent.”

The next time you hear Republicans like Eric Cantor, John Boehner and Mitch McConnell repeat their statement that corporations are overtaxed, you can tell them that “had these 12 companies paid the full 35 percent corporate tax, their federal income taxes over the three years would have totaled $59.9 billion.” Bob McIntyre, CTJ director, noted that these 12 companies are “just the tip of an iceberg of widespread corporate tax avoidance.”

Of course, most Americans suspect as much, even if they don’t have the exact figures. A recent Gallup poll asked the public’s opinion on where they stand on the tax cuts for the rich and the tax breaks for the corporations. By wide margins, they opposed tax cuts for the rich and for corporations.

So what are President Obama and the Democrats waiting for? They have the undeniable facts and overwhelming public sentiment behind them. Why do they let Cantor, Boehner and McConnell continue to mouth falsehoods without rebuttal?

It’s obvious. The Democrats want big-time money from the executives and political action committees of the Fortune 500. The Democrats are willing to let the Republicans fuzz the debate and try to make Medicare and Social Security benefits absorb the sacrifices.

Big corporations are laughing at us all the way to the taxpayer-bailed-out banks. They’re even laughing at their own shareholder-owners. The non-financial companies are sitting on about $2 trillion. Inert dollars, producing nothing and earning minuscule interest, are better deployed by enlarging the dividend payments to their shareholders. A mere 10 percent of that sum as dividend payments this year would pump $200 billion into an economy needing more consumer demand.

Reporters and columnists need to start addressing these topics at news conferences with members of Congress and White House staffers. The Washington press corps shouldn’t behave like sheep.

Ralph Nader is a longtime activist and founder of Public Citizen.