Budget Deal: Republicans In Service To Oil Companies, Never The Public

The “omnibus” budget for the next year is out. Here are some of the winners and losers.

With a Republican Congress, every budget battle is about ratcheting down the things our government does to make our lives better. Every budget battle is a defensive action, with Democrats fighting to keep things that help the public for another year or two. Republicans fight for tax cuts for the rich and corporations to defund government. Then they can claim that government doesn’t have any money, so we need to cut budgets. (Note that almost all corporate shareholders are largely the same rich people, so corporate tax cuts are really just tax cuts for the rich.)

What We The People Get

This time We the People “get to keep” tax incentives for wind and solar for another five years. The Earned Income Tax Credit (EITC) (for low income people with income from work), Child Tax Credit (CTC) (for people who have children), American Opportunity Tax Credit (AOTC) (for sending kids to college) were actually made permanent. We get to keep providing health care for 9/11 responders who got sick from helping at the World Trade Center site after the 2001 terrorist attack — all of which Republicans tried to strip out.

Making those tax credits permanent is a big win. These help lift 24 million working-class families.

The “Cadillac Tax” that was set up as a disincentive to employers to offer high-quality health insurance coverage is delayed for two years. This means people will be able to get better health insurance with lower co-pays and deductibles. (See the post “What Is This ‘Cadillac Tax’ Health Insurance Thingy?” for details.)

Because of all the tax cuts, the country’s public schools are generally underfunded to the point where teachers are using their own money to buy books for the students and supplies for the classrooms. The budget lets teachers forced to do this at least have a tax deduction from their income.

What We The People Stopped

Republicans were fighting to block the “fiduciary rule” that requires financial advisers to give advice that is in the interest of their clients, instead of tricking their customers just to make money for themselves — or at least disclose to customers if they have a conflict of interest. They didn’t get that rule blocked, so financial advisors cannot continue their fraud-based business model.

Republicans were trying to chip away at the Dodd-Frank bank-regulating rules, so Wall Street can expand its fraud-based business model. They were trying to strip power from the Consumer Financial Protection Bureau, and cut the ability of the Financial Stability Oversight Council to do its job. They didn’t get those.

Republicans Got Tax Cuts To Further Defund Government And Enrich Billionaires

Republicans fought for more corporate tax cuts and got $650 billion, including the “active finance exception” for multinational financial corporations and what Citizens for Tax Justice (CTJ) calls “the much-abused research credit.” CTJ says these “are nothing but ineffective giveaways to the nation’s wealthiest corporations.” CTJ concludes, “As a whole, this tax package is mostly a lobbyist-wrapped Christmas present for our nation’s biggest corporations.”

Republicans also won tax breaks for special interests including NASCAR, horse racing and film and television productions.

Having won another $650 billion of government defunding while handing $650 billion to big corporations, Republicans will soon come back and complain about “deficits” and demand a new round of cuts in the things our government does for us.

Oil Companies Get The Oil Export Ban Lifted

But Republicans especially fought for lifting the ban on exporting U.S. oil. This was their highest priority.

This is a typical news reports on the budget deal: “By far the biggest win for Republicans, besides the extended tax cuts, is a measure that would lift a four-decade-long ban on exporting crude oil.”

Why is this a “win” for “Republicans?” Because oil companies wanted it, period. The Republican Party is nothing if not always, always in service to oil companies. A political party placed ending the oil export ban as their highest, highest, do-or-die priority. It does nothing for the public, the country, the climate, jobs or anyone or anything else except for the oil companies, and this is what the Republican Party laid itself down to get done.

This puts more oil on world markets, just after the Paris climate talks. The reasons oil companies wanted this so much are:

1) In the short term, this gets some of the glut of oil out of the U.S., thereby raising gas and other prices within the U.S. (This was the real goal of the Keystone pipeline. Canadian oil is already coming into the U.S., the pipeline would take it to Gulf ports so it can be gotten out of the U.S., thereby reducing the glut and raising U.S. gas and other prices.)

2) The Paris climate agreement is a signal that the era of fossil fuel is ending. A lot of the oil that is still in the ground is going to have to stay there. The question is whose oil will have to stay in the ground, and producers are trying to get their oil out of the ground as fast as they can. Producers are now fighting with other producers to dump their oil before they are forced to stop. Saudi Arabia and OPEC are pumping oil as fast as they can. Lifting the U.S. oil export ban lets U.S. producers fight directly with them to get their own oil out of the ground first.

Democrats traded this in exchange for keeping tax incentives for wind and solar for another five years, and some of those other things We the People got to keep for a while longer.

P.S.: This Was Not Cool At All

By the way, the budget bill repeals a law requiring Country Of Origin Labels (COOL) on meats, because a corporate court decided We the People should not be allowed to know where the meat we purchase comes from. This cuts into the profits of giant meat producing corporations that are not U.S.-based.

For background on this see “Corporate Court Overrules U.S. Congress, Public.”

Sanders’ Corporate Tax Reform Plan Pays For His Infrastructure Plan

In the recent post, “How The Clinton and Sanders Infrastructure Plans Measure Up,” I mistakenly wrote that candidate Bernie Sanders does not yet have a corporate tax proposal:

Clinton’s infrastructure plan says only that it will be paid for through “business tax reform.” It does not detail the nature of the reforms that would pay for this spending. Similarly, Sanders does not yet have a specific individual and corporate tax proposal, but he has proposed a financial transaction tax and says he will close loopholes.

Oops. It turns out that Sanders does have a detailed corporate tax plan to pay for his infrastructure plan. He introduced the plan as a Senate bill shortly before announcing his run for the Democratic nomination for President. It is called the Corporate Tax Dodging Prevention Act. So let’s take a look at it.

Elizabeth Warren’s Principles For Corporate Tax Reform

First, though, that infrastructure post references Elizabeth Warren’s speech in which she laid out some criteria for evaluating the candidates’ plans. Summarizing:

1) Increase the share of revenue that corporations pay. … any “revenue neutral” plan leaves the country with too little money to fund basic services.

2) Level the playing field between small and big businesses. The business tax code is rigged against small businesses, making it harder for them to compete.

3) Promote investment and jobs in the U.S. Lower tax rates and loopholes for hiding profits overseas encourages more outsourcing of jobs and investment.

Also, there is the question of how the candidates treat the huge stash — more than $2.1 trillion — of corporate profits being hoarded in tax havens. Do they propose that these corporations pay the taxes they owe? Or do they offer these companies cash reward for having dodged taxes, if only they would please let We the People have some of the revenue we are owed?

Sanders’ “Corporate Tax Dodging Prevention Act”

Senator Bernie Sanders Corporate Tax Dodging Prevention Act is summarized in an April 14 Senate Budget Committee blog post, (Sanders is the ranking member of that committee.)

1) Ending the rule allowing American corporations to defer paying federal income taxes on profits of their offshore subsidiaries.

This would immediately bring in up to $620 billion of federal tax revenue currently owed on “offshore” profits but deferred. (It would also make available in the US more than $2 trillion of corporate profits that have been kept offshore, which could be reinvested or distributed to shareholders.)

Additionally, this would increase federal tax revenue by as much as $90+ billion each year thereafter.

These amounts are based on a report from Citizens for Tax Justice (CTJ) and the U.S. PIRG Education Fund, titled “Offshore Shell Games.”

A second look at the amounts owed by these companies , detailed in a letter to Congress titled, 24 International Tax Experts Address Current Tax Reform Efforts in Congress sets the amount this would bring in at ” about $900 billion over 10 years.”

2) Closing loopholes allowing American corporations to artificially inflate or accelerate their foreign tax credits.

A current loophole allows corporations to claim foreign tax credits for taxes paid on foreign income even if that income is not subject to current U.S. tax. This closes that loophole.

3) Preventing American corporations from claiming to be foreign by using a tax-haven post office box as their address.

This would stop American corporations from avoiding U.S. taxes by claiming to be a foreign company because they have a post office box in a tax haven country. Sanders’ bill says a corporation could not claim to be from another country if their management and control operations are primarily located in the U.S. (See last month’s post, “Pfizer Buying Allergan So It Can Pretend To Be Irish In Tax Scam.” The resulting company would still be based in NY/NJ.)

4) Preventing American corporations from avoiding U.S. taxes by “inverting.”

In an inversion, an American corporation acquires or merges with a (usually much smaller) foreign company and then claims that the newly merged company is a foreign one for tax purposes — even though the majority of the ownership is unchanged and little or no personnel or operations have actually moved offshore.

Under Sanders’ bill the U.S. would continue to tax such a company as an American corporation so long as it is still majority owned by the owners of the American party to the merger or acquisition.

5) Prevent foreign-owned corporations from stripping earnings out of the U.S. by manipulating debt expenses.

This stops multinational corporations from loading up their U.S.-based corporation with debt to companies they own outside of the US as a way to shift profits out of the U.S. company. They make interest payments to the foreign companies, deduct it, and this reduces or wipes out their U.S. income for tax purposes.

6) Preventing large oil companies from disguising royalty payments to foreign governments as foreign taxes.

U.S. oil and gas companies have been disguising royalty payments to foreign governments as foreign taxes in order to claim foreign tax credits. Sanders’ bill would stop this.

Does Sanders’ Plan Pay For His Infrastructure Proposal?

Sanders has proposed a detailed plan for addressing the country’s infrastructure needs, with an investment of $1 trillion. His plan to close several corporate tax loopholes appears to raise the necessary funds to cover this. Ending deferral alone would bring in $620 billion, and another $90+ billion each year following. This would raise the necessary funds.

On top of this the Senate’s Joint Committee on Taxation took a look at Sanders’ bill and a “partial score” concluded that items 2-6 would bring in an additional $133 billion.

The Washington Post fact checker looked at Sanders’ plan to fund infrastructure by closing these corporate tax loopholes and concluded that “What matters most is that Sanders’s claim of raising $1 trillion is at least credible — assuming the money is not also earmarked for other spending projects.”

Does Sanders’ Plan Measure Up To Warren’s Principles?

● Sanders’ plan closes loopholes and raises substantial revenue for use by We the People. It meets Warren’s principle #1.

● Sanders’ plan end the advantage that multinational corporations gain over corporations that want to keep their production and profit centers in the US. It meets Warren’s principle #2.

● Sanders’ plan ends incentives to shift jobs jobs, production and profit centers out of the US. It meets Warren’s principle #3.

● Finally Sanders’ plan tells companies to bring profits back from tax havens to the US and pay all of the taxes due. It does not reward them in any way for having dodged taxes. It meets the requirement that companies not be offered a “repatriation” tax break.

So Sanders has indeed met all of the criteria in a detailed, specific way.

Candidate Hillary Clinton has proposed spending a modest $250 billion directly on infrastructure, and another $25 billion to establish a National Infrastructure Bank for loans to cities and states for infrastructure projects that would be repaid through user fees, etc.

Clinton has said this will be paid for through corporate tax reform, but has not yet provided a detailed plan. Will her plan meet Warren’s three principles, as Sanders’ does? Will it require tax-dodging companies to pay-in-full the taxes they owe on that huge overseas stash of profits? We will see.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

So Much For Conservative Deficit Scare Talk

Republicans in Congress and the corporate-funded conservative echo chamber (redundant) are temporarily pausing from scaring people with “deficit” propaganda and are instead working on an end-of-the-year backroom deal to give out several hundred billion dollars in tax breaks that increase the deficit.

This is happening at a time when education, housing, infrastructure, and research and other things government does to make our lives better are being cut to a smaller share of the economy than any time since the government began tracking this data in 1962. Because deficits.

It’s called “tax extenders” and you should pay attention.

Create Deficits, Then Scare People With Deficits

Here is a post from an earlier deficit “crisis”: “Deficits Were On Purpose To Cause This “Crisis”,”

It was the plan. They forced these deficits on us on purpose. Reagan called it “strategic deficits.” It was a “shock doctrine” tactic, to get us to panic, and then move in with their “solutions.” So we are arguing about how much to cut out of the things We, the People do for our benefit, which the wealthy and their corporations get vastly wealthier and more powerful.

Here is how the game works:
● Pass tax cuts for the rich and corporations that increase the deficit – and inequality.
● Scare people about deficits to force cuts in things government does to make our lives better.
● Rinse and repeat.

Tax Extenders Bill

Congress is working on something called a tax extenders bill. They are renewing a bunch of tax breaks (some good, most bad) that were intended to periodically expire. This time they are making some of the breaks and loopholes permanent. The two-year cost of renewing more than 50 of these tax breaks is $96 billion. The 10-year cost of making certain business tax breaks permanent jumps to about $600 billion – $100 billion just for what two companies get for moving jobs and profits offshore.

Again: Tax breaks that encourage companies to shift profits and jobs offshore. Really?

Congress is not carefully debating each of the 50 tax breaks included in the package of extenders. They are not deciding which should be allowed to expire. Instead, Congress is deciding which of these costly corporate tax breaks should be made permanent.

The big ones: the R&D tax credit ($182 billion), Section 179 expensing ($77 billion), bonus depreciation ($281 billion), and two offshoring tax loopholes – Active Financing Exception (AFE) ($78 billion) and the CFC Look-Through Rule ($22 billion).

Tax Breaks That Encourage Companies To Shift Profits And Jobs Offshore

● The Active Financing Exception lets big corporations (primarily financial institutions such as GE Capital, Wall Street banks and insurance companies) avoid paying U.S. taxes on the financial income they (claim to) earn in foreign countries, so long as those profits remain officially offshore.

● The Controlled Foreign Corporation (CFC) Look-Through Rule (say that ten times, really fast) lets U.S. multinational corporations shift profits between foreign subsidiaries without triggering U.S. taxes that would normally be due.

39 Organizations Send Letter To Congress

On Wednesday 39 organizations sent a letter to members of Congress, saying:

● Corporate tax extenders should not be made permanent
● The Bonus Depreciation tax break and two tax breaks that encourage U.S. corporations to shift jobs and hide profits offshore (the Active Financing Exception and CFC Look Through Rule) should be allowed to expire and not be extended
● Corporate tax cuts should be paid for by closing other corporate tax loopholes
● The 2009 improvements to the Earned Income Tax Credit and Child Tax Credit should be made permanent

From the letter:

“As you vote on tax extender legislation this year, any effort to make tax cuts permanent should be reserved for only pro-worker tax credits. We do not support making any corporate tax extenders permanent. We also strongly oppose any extension of bonus depreciation and those tax extenders that encourage companies to shift jobs offshore and hide profits in tax havens (Active Financing Exception and Controlled Foreign Corporation (CFC) Look-Through Rule). …

“Renewal of any corporate tax breaks should be paid for by closing other corporate tax loopholes. Corporations have not contributed a dime to deficit reduction in recent years by repealing even one corporate tax break or loophole. Meanwhile, nearly $2.7 trillion in spending cuts are scheduled over the next 10 years. …

“It is time to end—and reverse—the double-standard whereby tax cuts for corporations are not paid for while services and other vital investments have to be paid for. …”

What You Can Do

The most important thing you can do is be aware of this and let Congress know that you are aware of this. Call your representative and senators and tell them to stop this. If they know the public is looking, they’ll take care.

You can click here to email your elected officials today. Tell Congress to reject these costly corporate tax breaks.

You can also support making the 2009 improvements to the pro-worker and pro-family Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) permanent. Republicans have opposed permanent status for these tax breaks needed by the families who struggle the most to pay their bills. Yet it is these tax credits that play an important role in cutting poverty and income inequality when all of us face wage stagnation – especially workers in lower-wage jobs.

Here are some fact sheets from Americans for Tax Fairness:

Bonus Depreciation

Active Financing Exception

CFC Look-Through Rule 

Again: Tax breaks that encourage companies to shift profits and jobs offshore? Really?

Again: So much for scare talk about “deficits.” That only gets dragged out to stop things that make people’s lives better.

See also:

Corporations Demand Budget Cuts, Owe Government $620 Billion

With Election Over, First Order Of Business Is $450B Corporate Tax Break

Government Hands $1 Trillion+ To Wealthy While Deficit Is $642 Billion

Deficits: Get the Money From Where the Money Went

“Government Doesn’t Have the Resources to Stop It”

Reagan Revolution Home To Roost America Drowning In Debt

Why We Have A Deficit

What Is The Real Agenda Of The Budget-Cutters

Cutting Government Creates Jobs Like Cutting Taxes Increases Revenue

Jobs Fix Deficits

Did The Rich Cause The Deficit

Jobs First Because Jobs Fix Deficits

The Real Deficit Is Jobs!

Why the Deficit Dominates DC Thinking

See WHY Austerity Can’t Reduce The Deficit

Deficit Trouble – Right Here In River City

How To Fix The Deficit

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Pfizer Buying Allergan So It Can Pretend To Be Irish In Tax Scam

The pharmaceutical corporation Pfizer will acquire pharmaceutical corporation Allergan in a deal valued at $160 billion. My colleague Richard Eskow called this combination of Pfizer (the maker of Viagra) and Allergan (the maker of Botox) “a merger of false desire and false beauty.”

More to the point, this deal is structured as an “inversion” designed to dodge U.S. taxes. Allergan (itself the product of a similar inversion) is headquartered in New Jersey but for tax reasons is incorporated in Ireland – a tax haven. After the acquisition, Pfizer will keep its headquarters in New York but change its corporate address to Ireland.

In other words, the resulting merged company will make and sell products in the same places it makes and sells them now. The same executives will occupy the same buildings. It will receive the same taxpayer-funded U.S. services, infrastructure, courts and military protection that it receives now. But the company will now claim it is “based” in tax-haven Ireland and thereby dodge U.S. taxation.

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Must Watch – Warren’s Warning About The Coming Corporate Tax Giveaway

“It’s not that taxes are far too high for giant corporations, as the lobbyists claim. No, the problem is that the revenue generated from corporate taxes is far too low.”
– Senator Elizabeth Warren

Senator Elizabeth Warren gave a “Change Is In The Air” speech Wednesday, talking about corporate tax reform. If there was ever an Elizabeth Warren speech to see, it is this one.

Warren began by describing how lobbyists and corporate CEOs are swarming Congress and saturating the media with a pitch that says corporations are paying too much in taxes, that this is forcing corporations to flee abroad and the solution is to slash corporate tax rates. This story of overtaxation is told and retold.

Warren says there is just one problem with this: “It’s not true.”

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Corporations Demand Budget Cuts, Owe Government $660 Billion

How MANY times have we heard corporate-funded conservatives and “centrists” whine about “deficits” and demand cuts in the things government does to make people’s lives better? How many times?

“We’re broke.” “Taxpayers can’t afford these … (pensions, health programs, infrastructure repair, food stamps, high-speed rail systems, scientific studies, you name it).” Over and over we are subjected to demands that our own government cut back on the things it does — teachers and schools, roads, food programs, dams, bridges, scientific research, health care (but never, ever on military corporate contracts).

This “deficits” drumbeat is incessant because it is so well funded with corporate cash.

Fortune 500 Corporations Owe $620 Billion In Taxes

What would you say if you learned that the same corporations funding this corporate-conservative anti-government “deficit” propaganda actually owed the government more than $600 billion (billion with a ‘B’), and another $90 billion each year?

Last week Citizens for Tax Justice (CTJ) and the U.S. PIRG Education Fund released an important report showing how Fortune 500 companies use tax-haven subsidiaries to keep $2.1 trillion out of the country to dodge up to $620 billion in U.S. taxes. These are profits already on the books, so the taxes are due – except for a “deferral” loophole that was quietly inserted into the tax code in the 1986 tax “reform” law.

The CTJ/PIRG report is titled, “Offshore Shell Games.” (Read the whole thing if you can, skim it if you can’t.) From the Executive Summary:

U.S.-based multinational corporations are allowed to play by a different set of rules than small and domestic businesses or individuals when it comes to the tax code. Rather than paying their fair share, many multinational corporations use accounting tricks to pretend for tax purposes that a substantial portion of their profits are generated in offshore tax havens, countries with minimal or no taxes where a company’s presence may be as little as a mailbox. Multinational corporations’ use of tax havens allows them to avoid an estimated $90 billion in federal income taxes each year.

Congress, by failing to take action to end this tax avoidance, forces ordinary Americans to make up the difference. Every dollar in taxes that corporations avoid by using tax havens must be balanced by higher taxes on individuals, cuts to public investments and public services, or increased federal debt.

This tax dodging also costs about $90 billion every year in lost federal tax revenue.

Again, the corporations that are funding this anti-government, conservative propaganda machine that is demanding cutbacks in everything that makes our lives better (but never, ever on military corporate contracts) are dodging $620 billion in taxes and another $90 billion every year.

Tax Repatriation Holiday

But wait, there’s more. (They have almost everything but they always want more.)

The giant corporations are engaged in a campaign to get out of paying those taxes they owe – now and in the future. They are demanding that the government cut the tax rate, not only on those taxes they already owe, but on future taxes as well.

This is a bit tricky, but just remember the word “repatriation.” If you hear someone in Congress talk about “repatriation” they are almost always talking about letting these corporations off the hook on this tax bill.

For example, when you hear that the “highway bill” can be “paid for” using “repatriation” (click the link to get a sense of this) they are saying they’ll let these corporations pay significantly less then they owe, and then use what’s left over (if any) to pay for the highway bill.

When you hear a politician say they will “raise money” using “corporate tax reform,” what they are saying is let these corporations off the hook for a chunk of their taxes now and in the future. (When you hear the word “reform” in Washington these days it means get ready to get hit upside the head with a hammer.) In this usage, “How Tax Reform Could Help Save U.S. Infrastructure” actually means let these corporations pay significantly less than the $620 billion they owe, and use the rest for … whatever.

Apologies in advance for the cliché here, but hearing corporate-conservative complaints about deficits when the corporations funding them are dodging hundreds of billions of dollars in taxes is like the child who shoots his parents and then asks for leniency because he’s an orphan. Enough about deficits and cuts already; make them pay their taxes.

Petitions

CAF petition: Tell your Senators: No tax breaks for corporations that shift profits and jobs offshore.

Americans for Tax Fairness petition: Tell Congress it’s time that corporations pay what they owe – their fair share! And when they do, we can invest in America’s future.

Progressive Congress: Tell Congress to make corporations pay what they owe on the $2.1 trillion in profits stashed offshore.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Trump: Don’t Make Corporations Pay Their Taxes

Republican economics has been stated a thousand ways by a thousand (always paid) voices. But the basic idea behind all the schemes has been hard to pin down. Finally Republican front-runner Donald Trump has spelled it out in a way anyone can understand.

Thursday’s Progressive Breakfast (you should subscribe, it’s free, it’s really good) contains a story in which Trump clearly articulates the Republican/Billionaire/Wall Street case for a low-or-zero tax on corporate profits: “because they don’t want to pay the tax.”

Trump Sides With Multinationals
Donald Trump backs repatriation in Time interview: “Pfizer is talking about moving to Ireland. Or someplace else … Do you know how big that is? It would wipe out New Jersey … They have $2.5 trillion sitting out of the country that they can’t get back because they don’t want to pay the tax. Nor would I … We should let them back in. Everybody. Even if you paid nothing it would be a good deal. Because they’ll take that money then and use it for other things. But they’ll pay something. Ten percent, they’ll pay something.”

There it is in a nutshell. The Republican case for low or no taxes: “because they don’t want to pay the tax.”

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In Tax Battles, “Competitiveness” Means Coercion

Watch out for this one. With fast track trade authority done, the big corporations are now pushing for massive tax giveaways. This is another exercise of raw corporate power by the few to take what they want from the many. The corporations use complexity to get people to tune out, and their schemes are masked by smooth words like “reform” and “competitiveness,” but it is all just another grab for (even more) money and power.

There are two areas where the corporations are coming at us. The first is a blatant grab to keep somewhere up to $700 billion in tax money they already owe on “offshore” profits. The second is a push to permanently cut corporate tax rates – even more.

Taxes Owed On Offshore Profits

Multinational corporations avoid paying U.S. taxes using a “deferral” loophole. This loophole lets them dodge taxes on profits made outside of the country until they bring the profits back into the country (called “repatriation”).

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Six Corporate Tax Myths In One Letter to Editor

How MANY mistruths can you count in a letter in today’s San Jose Mercury News?

Lower corporate taxes would boost economy

When the government wants to raise taxes, the counter argument is always that people and corporations will work harder if they can keep their earnings. It is either that, or pass the costs to the consumers. Either way, high taxes are a no-win situation for everybody. Now that we have the highest taxes of any industrialized nation, corporations are “voting with their feet” and using legal tax-inversion strategies to stay competitive. The administration that pushed for high taxes is crying foul and saying this is not patriotic. Now they don’t like the consequences of their greedy tax policies. Drop the corporate tax rate to 15 percent and watch the economy soar.

  1. Myth: People will work harder if they can keep their earnings. Actually, wouldn’t people work harder to make up for the money that goes to taxes?
  2. Myth: Corporations pass the “cost” of taxes onto consumers. Actually corporations can’t pass taxes to consumers. (And taxes are not a “cost.”) Summary: taxes are on profits and prices are already as high as the company can charge. If corporations could just increase prices to cover taxes then the profits would go up, which raises the taxes, so they wold have to increase prices again, which would increase profits, which raises taxes, so they have to increase prices again, etc.
  3. Myth: Taxes are no-win. Actually they pay for the reads, schools, courts, police, military and the rest of the things that enable corporations to prosper.
  4. Myth: We have the highest taxes. Actually we don’t. Corporations are shifting profits out of the country to avoid ever paying taxes. The solution is to make them pay their taxes, not lower tax rates to let them get away with this.
  5. Myth: The administration raised taxes on corporations. Actually the administration didn’t raise corporate taxes. Corporate taxes have been lowered from 46% to 35% since the 80’s.
  6. Myth: If the corporate tax rate was lowered to 15% the economy would soar. Actually there is no relationship between lower tax rates and higher economic growth. In fact, there is a correlation between lower rates and lower growth, possibly because lower taxes cause government to cut back on the things that help the economy prosper, like education, investing in infrastructure, basic research, etc.

The letter-writer probably actually believes the stuff he wrote. Many people do. This shows the effect of decades of corporate/conservative propaganda on the public. Unfortunately these beliefs are leading to policies that are killing our economy and our democracy.