By Steve Hynd
There's blood in the water - and the feeding frenzy may be aimed at corporate sharks who are dodging their fair share of taxes. Yesterday, Treasury Secretary Timothy Geithner said that the administration is crafting legislation to tighten up on corporation tax loopholes and use that to lower the corporation tax rate.
�I�m actually quite optimistic that we�re going to be able to start that process with a very strong pro-investment, pro-growth, pro-competitiveness proposal,� Geithner said, adding that the plan would be revenue-neutral.
Geithner�s statements come amid a flurry of action on the tax-reform front, which prominent policymakers on both sides have said should be examined.
The House GOP budget plan � crafted by Rep. Paul Ryan (R-Wis.), the chairman of the House Budget Committee � proposes reducing both the top corporate and individual tax rates to 25 percent. Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, also floated those figures in mid-March.
On Monday, Sens. Ron Wyden (D-Ore.) and Dan Coats (R-Ind.) introduced bipartisan legislation to comprehensively revamp the tax code.
Geithner, testifying before a Senate Appropriations subcommittee, suggested Tuesday that he thought the corporate tax code could be revamped before the individual one, a different approach from House Republicans and the Wyden-Coats bill.
The secretary also reiterated that the administration would be unwilling to examine a policy allowing multinationals to bring offshore profits into the United States at a reduced tax rate outside of broader corporate reform. Some lawmakers and a coalition of businesses have called for such a tax holiday in advance of tax reform.
�What we want to do is improve incentives for people investing more of those resources here in the United States,� Geithner said.
Obviously, a "revenue neutral" plan is far from ideal when most of America's biggest, most profitable companies have been dodging tax to the point where they pay nothing at all.
Enjoying record profits and taxpayer-funded bailouts as the economy slowly recovers from a financial crisis, nearly two-thirds of US corporations don't pay any income taxes, instead opting to abuse tax loopholes and offshore tax havens. According to this study from the non-partisan Government Accountability Office, 83 of the top 100 publicly traded corporations that operate in the US exploit corporate tax havens. Since 2009, America�s most profitable companies such as ExxonMobil, General Electric, Bank of America and Citigroup all paid a grand total of $0 in federal income taxes to Uncle Sam. Tax havens alone account for up to $1 trillion in tax revenue lost every decade, money that could be invested in K-12 education, colleges, public health, job creation and hundreds of other worthy public programs.
However, at least such a revenue-neutral plan would shift some of the onus from smaller companies to the big 100, who would finally be paying some of their share. That's got to be good for American economic growth and competitiveness. And closing those offshore loopholes would also mean that the big 100 would be forced to invest more of their billions in profits inside America, further fuelling domestic growth.
However, with the folks in DC leading the way, some State legislators are looking at making giant tax-doging corporations pay more of their share of state taxes too. In Alabama, of all places:
The House Democratic Caucus will introduce a package of a dozen bills to put a stop to corporate freeloading, ensuring that corporations pay Alabama income taxes on income they earn in Alabama. If this corporate responsibility package passes the Republican dominated Legislature, it will bring in an additional $200 million next year for the Education Trust Fund which has a $165 million shortfall this year.
"Democratic lawmakers have made a choice,� said Democratic House Minority Leader Craig Ford (D - Gadsden). �Our �handshake� is with the teachers, students, and working families of the state, not with the big businesses that are abusing our tax code for the sake of profit.�
�In 2008, 1700 companies doing business in Alabama reported $413 billion in income to the IRS but paid absolutely no Alabama state income tax,� said Representative Richard Lindsey (D - Centre). �There were 16 companies in Alabama that reported $1 billion in federal income each. Yet they paid zero Alabama income taxes.�
Alabama Democratic Party Chairman Judge Mark Kennedy applauded the move, saying, �Alabama Republicans blame our budget on our public servants while big corporations avoid paying millions in state taxes. Closing these loopholes will ensure these big business pay their fare share, instead of forcing small business owners and hard-working Alabamians to shoulder the burden alone.�
I'm sure Dems in other states will follow Alabama's lead. With Paul Ryan's proposed GOP budget only looking to reduce the corporation tax rate without closing loopholes - a massive corporate welfare giveaway at the expense of common people - the optics and framing have never been better. Democrats should thank folks like US Uncut for that.
Kind of related - look at this: http://www.globescan.com/news_archives/radar10w2_free_market/
ReplyDeleteWow, thanks, empty. More Chinese than Americans now approve of the free market. Wow.
ReplyDeleteO'course, if the market was actually free...
Regards, Steve
I have mixed feelings about corporate tax. Who do you think is going to pay that tax? Consumers are going to pay that tax. It is going to be reflected in the prices of the products and services provided by the corporations. Raise the taxes on corporations and you are not reducing the money in the pockets of the owners of those corporations, you are merely creating inflation, and taking money out of the pockets of consumers.
ReplyDeleteOr if what they claim is true and other countries actually do have lower tax rates than we do, you are going to reduce exports, reduce the number of jobs and, once again, take money out of the pockets of the working man.
Courts have declared that corporations "have the rights of persons" but they are not persons. They are personless enteties that take no pride of ownership or joy in the accumulation of wealth. The profit is merely money in a bank on the books, it belongs to no actual person until it is distributed in the form of dividends. Until then it just sits in a bank belonging to no one.
Once paid out as dividends the recipient pays taxes on that money as income, but the corporation also paid taxes on that money as income, so it is actually taxed as income twice.
The whole thing strikes me as a little bit wierd. There is this constant desire to make "the other guy" foot the bill, but it always come back to the basic fact that there is no free lunch. We just have a hard time getting benefits without having to pay for them.