Tuesday, March 29, 2011

Corporate vs. Public

Jon Stewart "gives up."

In a informative sketch, Stewart once again expresses dismay about the GOP-led campaign against public workers as "budget busting" leeches, while ignoring any sense that our corporate tax structure is integrally linked to the fiscal crisis. This is an argument that simply doesn't seem winnable by Democrats - and neither Stewart nor I can figure out why.

How many times have I heard conservative pundits and politicians decry our outrageous corporate tax rate - "highest in the industrialized world" - while completely ignoring (or being shamefully clueless) about the discrepancy between tax rates and taxes paid. Yes, the corporate tax rate is officially 35%. But NO corporation pays anywhere close to the rate .... and 2/3 of US corporations pay no corporate income taxes. That's none. Zero. And to make matters worse, the top earning corporations receive additional tax benefits in the from of subsidies and rebates.

It is astonishing, I know. How can such a profoundly corrupt system be completely lost on voters and Republican congressman? And I get the criticism of the Democrats. It is absolutely valid. Liberal leaders do try to accomplish too much, and they are reasonable targets for out-of-control public spending. But this double-standard is just too much for an unaffiliated, moderate voter like me.

I sympathize with Stewart, and I wonder how Democrats can be so clueless about educating the public on this. Unless they don't really want to. What would be wrong with a series of commercials - especially during elections - that is committed to exposing the corruption of the system? Why is that so hard? Where are the Democratic versions of the Koch brothers?


steven said...

Why raise taxes on corporations when they will just pass the cost on to consumers? That's a losing strategy.

I have a suggestion for Michael Mazenko and for Democrats. Leave the tax issue alone and hammer the corporate subsidies and rebates to death. That's a winning strategy.

mmazenko said...

Oh, I agree on the subsidies and rebates. But won't corporations just pass those costs on to the consumer as well?

steven said...

Those aren't costs, Michael. They're the opposite of costs. They give the corporations that receive them an unfair advantage over their competition.

The whole idea of "big corporations vs government" is a myth, bought into by both conservatives and progressives, and used by both groups to rally their support bases. The reality is that most of the time corporations and the government form a partnership which serves the interests of the wealthy and powerful elite at the expense of everyone else.

Anonymous said...

Force corporations to pass, say, 90% of profits on to shareholders and the problem is solved. But, of course, this provides lots of incentive for management to spend money on silly things or raise their own salaries to reduce profits. Oh wait, they already do that.

Robert Reich argued for ending corporate income tax. To some extent, it makes them more person-like and deserving of constitutional privileges accorded people. Of course, corporations aren't people - too bad the Supreme Court hasn't figured that out.

steven said...

abellia, there is such a thing as the retained earnings tax, which taxes anything over $250,000 in excess of the cash needed to be retained to run the business or make needed capital improvements.

Michael, I wonder if the 2/3 of US corporations you mention that don't pay any corporate income taxes do so because they have no profit. Lots of corporations operate at a loss. Could you enlighten us on where your figures came from?

mmazenko said...

Steven, these numbers, which have been known for at least a decade come from the GAO. Clearly, 2/3 of US corporations are operating at "a loss." They simply use a complex system of tax deductions and profit reinvestment to "show" no profit and no loss. That is the optimum situation to eliminate tax burden.

steven said...

In other words, Michael, there's a conspiracy between those wealthy corporations who utilize complex tax deductions to eliminate their tax burden and the politicians who write the tax laws. That sounds about right, except that the conspiracy goes much farther than tax law.