Respectfully submitted by Lawrence Rafferty (rafflaw)- Guest Blogger
I have written in the past about corporations dodging taxes, but this latest story out of Washington takes the cake. Susan Ford, an executive with Corning, Inc. testified recently at a House Ways and Means committee meeting and made the following claim. “American manufacturers are at a distinct disadvantage to competitors headquartered in other countries. Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers, and virtually all operate under territorial systems which encourage investment both abroad and at home.” Think Progress That is a very strong statement coming from Ms. Ford. What is really interesting is that her claim that foreign companies face a lower corporate tax rate would be important issue, if it only was true!
“In fact, according to Citizens For Tax Justice, the company received a $4 million refund from 2008 to 2010. The truth is that Corning, Inc. is one of at least 26 companies that paid zero Federal taxes on their profits. ” Think Progress According to the Citizens for Tax Justice, Corning actually paid an effective tax rate of -0.2 percent for 2011! Now, as many on this blog can attest to, I am no math whiz, but a negative tax rate is a good thing, isn’t it? The truth that Ms. Ford and many other Corporate executives don’t want you to know is that the United States, while it does have one of the highest marginal tax rates, its effective tax rate is lower than most. In fact, according to Think Progress, the effective rate in 2011 was the lowest it has been in 40 years!
“U.S. corporate taxes that were actually paid (the effective rate) fell to a 40 year low of 12.1 percent in fiscal year 2011, despite corporate profits rebounding to their pre-Great Recession heights. The U.S. both taxes its corporations less and raises less in revenue from corporate taxes than its foreign competitors:
Why wouldn’t Ms. Ford and her fellow corporate executives want you to know that they are paying an effective tax rate that is so low that they are actually obtaining refunds from the IRS even though they are earning Billions in profits? Why do politicians keep repeating the meme that our corporations are being bogged down financially by the taxes that they are being charged and that they just can’t compete against these foreign companies that pay less taxes? When you are actually paying little or no taxes like the 26 companies mentioned above, how much lower can your taxes really go?
How can you not be competitive when you are not paying any Federal taxes at all? It is time for politicians of all stripes to actually tell the American public the truth about corporate taxes. The good Benedictine Nuns taught me that it is always better to tell the truth. Our long nosed fellow shown above learned the lesson too. So, here it goes. It isn’t Federal taxes that are preventing United States corporations from being competitive! Now, was that so hard? My nose feels much better now.
By the way, should there be an investigation into the untruths that Ms. Ford testified to? Let’s here what you think!
Additional Reference: Citizens for Tax Justice; Susan Ford Testimony
This lie figured in one of the Obama McCain debates. McCain said, high tax rate and Obama said yes but because of loopholes, very low effective tax rate.
Why do you want to keep a good lie down.
By the way, should there be an investigation into the untruths that Ms. Ford testified to?
Yep
If they can prosecute Clemens for perjury, why not HER? I think that would induce more folks to tell the truth in their testimony.
A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.
James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.
He shows that at least £13tn – perhaps up to £20tn – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, “protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy”. According to Henry’s research, the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than £4tn in 2010, a sharp rise from £1.5tn five years earlier.
The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.
Oil-rich states with an internationally mobile elite have been especially prone to watching their wealth disappear into offshore bank accounts instead of being invested at home, the research suggests. Once the returns on investing the hidden assets is included, almost £500bn has left Russia since the early 1990s when its economy was opened up. Saudi Arabia has seen £197bn flood out since the mid-1970s, and Nigeria £196bn.
“The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments,” the report says.
The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry’s calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world’s population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.
“These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people,” said John Christensen of the Tax Justice Network. “People on the street have no illusions about how unfair the situation has become.”
TUC general secretary Brendan Barber said: “Countries around the world are under intense pressure to reduce their deficits and governments cannot afford to let so much wealth slip past into tax havens.
“Closing down the tax loopholes exploited by multinationals and the super-rich to avoid paying their fair share will reduce the deficit. This way the government can focus on stimulating the economy, rather than squeezing the life out of it with cuts and tax rises for the 99% of people who aren’t rich enough to avoid paying their taxes.”
Assuming the £13tn mountain of assets earned an average 3% a year for its owners, and governments were able to tax that income at 30%, it would generate a bumper £121bn in revenues – more than rich countries spend on aid to the developing world each year.
Groups such as UK Uncut have focused attention on the paltry tax bills of some highly wealthy individuals, such as Topshop owner Sir Philip Green, with campaigners at one recent protest shouting: “Where did all the money go? He took it off to Monaco!” Much of Green’s retail empire is owned by his wife, Tina, who lives in the low-tax principality.
A spokeswoman for UK Uncut said: “People like Philip Green use public services – they need the streets to be cleaned, people need public transport to get to their shops – but they don’t want to pay for it.”
Leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008, when the secrecy shrouding parts of the banking system was widely seen as exacerbating instability. But many countries still refuse to make details of individuals’ financial worth available to the tax authorities in their home countries as a matter of course. Tax Justice Network would like to see this kind of exchange of information become standard practice, to prevent rich individuals playing off one jurisdiction against another.
“The very existence of the global offshore industry, and the tax-free status of the enormous sums invested by their wealthy clients, is predicated on secrecy,” said Henry.
http://www.guardian.co.uk/business/2012/jul/21/global-elite-tax-offshore-economy
http://www.guardian.co.uk/business/2012/jul/21/offshore-wealth-global-economy-tax-havens
Wealth doesn’t trickle down – it just floods offshore, new research reveals
A far-reaching new study suggests a staggering $21tn in assets has been lost to global tax havens. If taxed, that could have been enough to put parts of Africa back on its feet – and even solve the euro crisis
shano.
that is a lot of coin to be hiding from taxes!
Gee, I thought you were allowed to lie to Congressional committees.
I mean defendents in criminal trials are allowed to lie or take the fifth.
Shouldn’t corporate “persons” be allowed the same rights.
I thoúght SCOTUS hsd ruled so. Like no need to bring in more cases foe rulings, it is a general thing now.
Ms. Ford should be prosecuted personally and her company as well since she was putting forth the company lie.
Corporations that present such falsehoods should have their charters put in jeopardy and revoked if the lies aren’t corrected or if additional lies are told.
The corporate charter penalty is an interesting one bettykath.
American manufacturers are at a distinct disadvantage to competitors headquartered in other countries.
===========================
Really. Put in a real enforceable flat tax and see what happens with that. Oh, wait. Certain individuals are trying to get elected.
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The truth is that Corning, Inc. is one of at least 26 companies that paid zero Federal taxes on their profits. ” Think Progress According to the Citizens for Tax Justice, Corning actually paid an effective tax rate of -0.2 percent for 2011! Now, as many on this blog can attest to, I am no math whiz, but a negative tax rate is a good thing, isn’t it? The truth that Ms. Ford and many other Corporate executives don’t want you to know is that the United States, while it does have one of the highest marginal tax rates, its effective tax rate is lower than most. In fact, according to Think Progress, the effective rate in 2011 was the lowest it has been in 40 years!
===========================================================Corning knows how to make glass.
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Why wouldn’t Ms. Ford and her fellow corporate executives want you to know that they are paying an effective tax rate that is so low that they are actually obtaining refunds from the IRS even though they are earning Billions in profits? Why do politicians keep repeating the meme that our corporations are being bogged down financially by the taxes that they are being charged and that they just can’t compete against these foreign companies that pay less taxes? When you are actually paying little or no taxes like the 26 companies mentioned above, how much lower can your taxes really go?
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http://www.spike.com/video-clips/tch9pm/enron-the-smartest-guys-in-the-room-sharon-watkins-star-witness
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Ask Enron Sharon. She was worried about losing her job.
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The good Benedictine Nuns taught me that it is always better to tell the truth. Our long nosed fellow shown above learned the lesson too. So, here it goes. It isn’t Federal taxes that are preventing United States corporations from being competitive! Now, was that so hard? My nose feels much better now.
By the way, should there be an investigation into the untruths that Ms. Ford testified to? Let’s here what you think!
==============================
That’s what I think.
raff, What the state giveth, the state can taketh. Corporations that are bad citizens should have their charters revoked. Of course, those who profit from dividends would object. And there would be job losses so communities might not be too pleased. But revocation of one or two of the worst offenders just might make the rest of them wake up. From West Wing, quoting a basketball coach, (paraphrased) “throw the elbow. do it once so it is seen. you’ll never have to do it again.” We need to throw an elbow.
bettykath,
You have to throw the elbow more than once. They won’t forget. A choke hold until they’re unconscious might be better.
“By the way, should there be an investigation into the untruths that Ms. Ford testified to?”
Absolutely. Especially if her testimony was under oath. Perjury before a Congressional committee is still perjury.
Well played, raff.
Trickle down economics — that’s the big dogs peeing on the little dogs
rafflaw:
did Corning make any profit? When you say refund what exactly do you mean? What was the money for? Did the government just give Corning a chunk of cash or was it a refund from taxes paid over and above what was owed? Did they have write-offs or deprecations they didnt take and moved to the next year for business reasons like higher income in the next year?
You also have to remember this:
“From a purely economic standpoint, it makes no sense to tax corporations at all, because only people pay taxes, not legal entities. The corporate tax is paid by customers in terms of higher prices, by suppliers in terms of lower volumes of business, by employees in terms of lower wages and by stockholders in terms of lower returns. Many countries used to have higher corporate-tax rates than the United States, but, over time, they realized they were losing business — and jobs — to countries with lower rates; so most countries have been reducing their corporate-tax rates to attract new businesses and global firms.”
Bron,
Yes Corning made a profit.
here is 2011 and 2010 financial report for Corning:
http://www.corning.com/uploadedFiles/Corporate/ww/News_Center/News_Releases/2012_News_Releases/docs/3BLP29TT11.pdf
it looks like they paid 408 million in taxes and paid a 0.23 dividend per share.
It also looks like they took some tax benefits from previous years.
Maybe one of the accountants could explain it?
Bron,
If you read the linked information, Corning had 1.9 Billion in profits during the time associated with the refunds.
Bron 1, July 22, 2012 at 6:04 pm
here is 2011 and 2010 financial report for Corning:
http://www.corning.com/uploadedFiles/Corporate/ww/News_Center/News_Releases/2012_News_Releases/docs/3BLP29TT11.pdf
it looks like they paid 408 million in taxes and paid a 0.23 dividend per share.
It also looks like they took some tax benefits from previous years.
Maybe one of the accountants could explain it?
======================================
Bron, I’ll go out on a limb here. GE used to say their financial statements were totally transparent. Then they stopped saying that.
They had overall profits on a global basis. Apparently if you look at the US alone, they incurred a loss. US multinationals only pay US income tax on profits earned by the US corporate group, not on profits earned by foreign subsidiaries.. US income tax is incurred, in general, on the profits earned by foreign subsidiaries, only when those profits are distributed by the foreign subsidiary to its US owners. The above is how the tax returns are actually filed, and explains the cash tax cost. Tax expense for financial statement purposes is reported on a consolidated basis, and has only a tenuous relationship to cash taxes.
Thanks John B. another reason to offshore profits.
Riffing on bettykath’s quite appropriate comments, the idea seems quite appropriate. If corporations are people shouldn’t the coporation itself, not simply human executives be subject to imprisonment (suspension or revocation of its business license for crimes such as perjury or death caused by corporate neglect or malfeasance? Yes, they should.
JB, Do you know what you’re talking about? Are you as much as an a**hol* as you appear to be.
Tax expense for financial statement purposes is reported on a consolidated basis, and has only a tenuous relationship to cash taxes.
Oro Lee 1, July 22, 2012 at 5:26 pm
Trickle down economics — that’s the big dogs peeing on the little dogs
—————–
So true, ROFLMAO
Raff,
Check out the country of Ireland….. You’ll be amazed at the number of American Corporations that are leaving because the country can no longer support corporate welfare….. They are returning to the US and are looking for even more tax breaks…..
Good article by the way….
John B. You explained the concept behind the huge profits that can be shown as losses on US tax returns. thank you.
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Bron,
“From a purely economic standpoint, it makes no sense to tax corporations at all, because only people pay taxes, not legal entities. The corporate tax is paid by customers in terms of higher prices, by suppliers in terms of lower volumes of business, by employees in terms of lower wages and by stockholders in terms of lower returns. Many countries used to have higher corporate-tax rates than the United States, but, over time, they realized they were losing business — and jobs — to countries with lower rates; so most countries have been reducing their corporate-tax rates to attract new businesses and global firms.”
————-
Who are you quoting? This is nonsense. Roberts, et al have declared that corporations are people, therefore, corporations should pay tax at least at the same rate as the rest of us. Otoh, look at the graph that raf posted in his article. Other countries tax corporations at a higher rate and they collect more money than the US.
Thanks AY.
rafflaw:
Superb. Thanks for lifting Diogenes’ lamp to these guys.
Raff,
Ms. Ford is obviously upset that Corning is not receiving enough Federal tax rebates.
Not enough fiberglass insulation.
rafflaw,
Copy me on what Gene H. and mespo said!
Thanks Gene and Mespo and Elaine!
Mike S.,
Maybe Ms. Ford wants some of that oil company money that Congress likes to handout.
OK OK, but if a corporation is a person, then it has to pay US taxes while it remains a US citizen even on money it earns abroad, right?
Or doesn’t it have to give up its US citizenship if it doesn’t want to do that?
Or something?
Malisha,
Depends on where the corporation is incorporated. Corporations aren’t people but they are individual legal entities. Just take care that you don’t pierce the corporate veil.
http://www.businessweek.com/news/2012-05-11/facebook-co-founder-saverin-gives-up-u-dot-s-dot-citizenship-before-ipo
The “corporations are people” meme is getting old. They are collections of people organized and chartered by a state to do business or other activities, as a means of protecting the assets of the officers and stock holders of the organization by limiting the liability of corporations to the assets they possess, except in limited cases where the officers of corporations and board memebers can be held accountable for fraudulent and other criminal activity. That’s the basic, fundamental definition of a corporation. Corporations have rights that are only inherent in the people that comprise the organization, that those people bring to the corporation as it’s formed, such as the right to free speech and assembly. There is no inherent right in the Constitution for a corporation to be formed, of course, but there are rights of freedom of assembly, and I’m not aware of any case law that addresses that issue.
On the issue of taxation- The tax code is so ridiculously complex, especially for corporations, that trying to make heads or tails of it is impossible for all but the most highly trained tax lawyers and accountants. I come from a family of accountants. My father owns an accounting consulting firm that specializes in IFRS (Internationsl financial reporting standards) and in international insurance practices. In reality, even concepts that seem as simple as profit can be construed many different ways. At want point do you define profit? Is profit the amount of money after you pay for the materials involved in making a product or providing a service? Is the profit the amount of money left after you pay your staff, material costs, and other overhead? Does profit start after you reinvest into your business? Are dividends the only profit that matters, as that’s the only profit that the people who actually own the organization get to keep? Reporting standards often vary widely from what people think of as actual profits, and not much can be construed from a simple statement of profits. My father told me that when his firm managed an international merger, it cost the new company around 22.8 million dollars just to pay people to figure out the US tax code. and the tax documents alone for one corporation, if they could be printed out, would have filled a multi story office building. That’s for one company. It’s not so cut and dried as people tend to make it, on either side of the debate.
To Bron’s point- Corporations don’t pay taxes. Ever. Taxing a corporation is a silly little lie that governments play. A corporate tax is a hidden tax on the people that buy the products and services of that corporation, with the possible (and very rare) exception of investment income earned by a corporation from it’s own assets, as opposed to income from goods or services provided.
Where do corporations get their money? Aside from corporations that invest (and that investment is usually a kind of service) they get the money from consumers. That’s it. No where else. They don’t print their own. They don’t get a magic money fairy that hands them money from a tree. It comes from the consumer. So saying that corporations pay taxes is a horrendous deceit practiced for generations.
Government says to corporation- “Give us 20 percent of your profits.”
Corporation- “Sure. Here you go.” (Whining edited out.)
Customer- “Why did the price of this product go up by 20 percent?”
Corporation- “Taxes. We’re moving to Country X. Less taxes, cheaper labor. Then we can drop the prices to a level you the consumer are willing to pay.”
Consumer- “Dey took our jerbbs!”
Raf, Elaine, Mike, Gene,
Great selection of stories this weekend.
rafflaw,
I thought you might find the following article interesting:
Super-Rich Hold Up To $32 Trillion In Offshore Havens: Report
http://www.huffingtonpost.com/2012/07/22/super-rich-offshore-havens_n_1692608.html
Excerpt:
LONDON, July 22 (Reuters) – Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues, according to research published on Sunday.
The study estimating the extent of global private financial wealth held in offshore accounts – excluding non-financial assets such as real estate, gold, yachts and racehorses – puts the sum at between $21 and $32 trillion.
The research was carried out for pressure group Tax Justice Network, which campaigns against tax havens, by James Henry, former chief economist at consultants McKinsey & Co.
He used data from the World Bank, International Monetary Fund, United Nations and central banks.
The report also highlights the impact on the balance sheets of 139 developing countries of money held in tax havens by private elites, putting wealth beyond the reach of local tax authorities.
The research estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3 to $9.3 trillion of “unrecorded offshore wealth” by 2010.
The researcher’s don’t know what they’re talking about. The Germans still have plenty of hidden plunder they won’t tell you about. The Swiss won’t tell you either. Neither will the Norwegians.
CLH:
YEP, if the govmint would do away with all the loopholes and just say profit is what is left after all bills have been paid for the year and wages paid and taxed it at about 10%, oh what a recovery we would have.
They should do that for consumers too, you make 100 bucks send in 10. Doesnt matter if it was earned through actual work or investments. No deductions, no nutten.
I imagine your father would make a little less money but maybe not, he could spend his time doing real accounting and not worry about tax code.
bettykath,
Thanks!
Elaine,
It s amazing how selfish the uber wealthy can be. Thanks for the link.
The only people I hear whining are those who want the money others earn…and are willing to give up their liberty to get it. The gov’t that can give has the power to take. Which is fine for a Marxist, until they take it from him too.
All the spin aside, all the Marxist crap aside…U.S. companies go to other countries for a reason. Boeing left Washington for a very good reason.
GE, (you know that company in Obama’s back pocket) is in other countries for a reason…Anyone want to guess what that might be?
Cash only. No W-2 or 1099. Don’t tell anybody.
Bill, The companies leave because of their greed. Lower wages, no benefits required, few if any pollutions standards, cheaper materials and maybe lower taxes or more tax loopholes.
bettykath,
These same wealthy people get the tax laws written to protect their earnings that the rest of can’t take advantage of. Why should there be a cap on earnings for the social security tax, for example?
raff, I read that if the cap on Social Security contributions was lifted, it would solve the long-term shortfall projections instantly. As of right now, if one makes more than $110,100 no more has to be paid in that year. Some of the 1% make that much in a day or two. After that, no more contributions the rest of the year.
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/240/~/2012-social-security-tax-rate-and-maximum-taxable-earnings
OS,
Thanks for the link. I read the same thing. I have not seen any viable reason for exempting income over $110,000, other than to give high income people a break.
Bill:
“The only people I hear whining are those who want the money others earn…and are willing to give up their liberty to get it”
*********************
You need to get out more. US companies spend around $3 Billion a year whining to your elected officials that they need more tax, regulatory, and enforcement breaks.
They do need more breaks. I own a business and I assure you, when taxes go up for small or big businesses, prices will follow eventually. Eventually corporate taxes are nothing more than a tax increase on EVERYONE who buys their products and services.
It amazes me that you want to tax evil corporations because of their evil profits, yet you expect them to act like angels after they are taxed and just eat smaller profits. That is not how it works.
This fairy tale that corporations are making huge profits through some sort of hiden tax breaks is absurd. There are a select few companies that actually get these hidden tax breaks…GE being a prime example.
But for the vast majority of us, the Dems are calling legitimate tax deductions loopholes. When I buy equipment for my compnay, I get a tax deduction for that. When I pay for health insurance, I can deduct that as an business expense. Donations to charity and sponsorships are deductions that all businesses take. Yet Dems call those “tax loop holes.” Do you know what will happen if you take these deductions away from us and keep the tax rate as high as it is?
Corporations sell their products and services at the price people are willing to pay. When a company fails to produce a desirable product, the compny fails in the real world. Unless, of course, you are a compnay controlled by a big union that donates millions to certian politicians.
You didn’t answer my question however….why do companies leave the U.S., a country that enables them to make obscene profits far more than they could make setting up in another country.
The Marxist spin that American companies pay low corporate tax rates doesn’t match up with reality.
Bill,
The companies leave to shelter even more money and they move jobs in order to pay the orders less to squirrel away even more profits from our economy.
Why should anyone eons who makes over $110,000 not have to pay Social Security taxes on 100% of their income like I do?
Bron + CLH:
Bron: “From a purely economic standpoint, it makes no sense to tax corporations at all, because only people pay taxes, not legal entities. The corporate tax is paid by customers in terms of higher prices, by suppliers in terms of lower volumes of business, by employees in terms of lower wages and by stockholders in terms of lower returns.”
There is a problem with this contention and that is: other taxpayers are forced to pay for the services provided to companies who may be producing produces those taxpayers do not want, or even, vociferously disagree with being produced in the first place–like soda pop, Koolwhip, fracking, Humvees, assault rifles, violent video games, and many thousands of other products that I find to be worse than useless.
Without the goods and services that are provided by taxes, the corporate entity would not be able to make and sell its stuff, whatever it is. Saying that taxing them hurts their customers, employees, or whatnot is not true; it only means that their customers are expected to pay the ACTUAL costs of the production of those goods.
Bron: “Many countries used to have higher corporate-tax rates than the United States, but, over time, they realized they were losing business — and jobs — to countries with lower rates; so most countries have been reducing their corporate-tax rates to attract new businesses and global firms.”
You should go ahead and move on to “hourly wages” in this model, because that’s the ultimate objective of these corporations: to “equalize” wages between the US and Third World nations, and this has been explicitly stated by some*–it’s not just zeroing out corporate taxes that is at work here; the goal is to shift all wage-earners to peonage while simultaneously demanding that they fund all government functions too.
* http://www.nytimes.com/2009/11/11/business/11views.html?scp=2&sq=%22breaking%20views%22&st=cse
Sometimes “corporations are people” and sometimes not; it all depends on who’s expected to pay for the needs of the society and for the needs of business. Somehow, no matter what, they expect to be let off hook in every instance. How is it that they are given speech, but not responsibility? At the very least, they should pay for the services they require for their business’s prosperity!
Please don’t tell me that I am responsible for paying for all the things needed by all those businesses whose very products and business models go directly against everything I believe in and even against life on this planet–that is quite simply, a crock.
Bill:
Well now that you’ve conceded your point that only the those who want other people’s money are whining, let’s look at your next point. Namely you need those breaks … and you’re right, you do. It’s the doing of that patron saint of conservatism ol’ Ronnie Reagan. Reagan decided to lower the tax rate but remove most of the deductions. Remember your golf club membership deduction?
Brilliant move, the conservatives crowed. What they forgot was that the next few Congresses got caught in Ronnie’s “raise defense spending but lower taxes” mentality. Oh, he beat the Soviets alright, but he insured higher tax burdens on American business to pay for it. That’s why we need the deductions we wrest from Congress.
Now to your next question: why do companies leave? They leave because they get near slave labor prices in other developing countries an dmake even more obscene profits. Thus their cost of labor goes way down. But now they are finding their quality of worker — and hence production — also drops when they leav eour shores for developing countries. So we’re seeing a reversal of the outsourcing trend. And guess what? The big boys who get most of the tax breaks now want more for doing what American business used to consider a patriotic duty to do — employ Americans.
Quite a country wouldn’t you say?
By the way, I own a business too. Don’t make the mistake of thinking what applies to you and me applies to the big boys. That’s what they’d like you to think. Don’t.
Bill, people really need to stop conflating small regional based American businesses with Multinational corporations.
These are not your fathers corporations. No, not at all- some have more money than most nation states.
And of course no Multinational or extraction based corporation ever uses the real cost of their production- environmental & other costs are always left out.
In this way they privatize profits while socializing losses in the form of degraded fisheries, heath problems from air pollution, water contamination and wholesale destruction of habitats (coal mining, uranium mining, etc)
If the minimum wage had kept pace with the rise in executive salaries since 1990, Americas lowest paid workers would be making more than $23 an hour.
When I was working full time – a long time ago – I got a “raise” mid-year. I hit the SS cap. Those working with me who didn’t make as much and really needed the “raise” had to continue to pay. I didn’t need that “raise”. I made enough that the 7.5% was not a big deal.
Regular raises worked the same way. Those who made the most got the biggest raises. Figure it out. Everyone gets a 3% raise based on their current salary. It makes the gap between those who have and those who don’t much bigger every year. Those with the power to make a change won’t because they like getting more and the more that is given to everyone else means there is less for them. There is no incentive for fairness as long as greed is the motivating factor.
I saw very clearly that it is rare that a person gets promoted into top positions just on the basis of their abilities. The people who are moved into top positions are those whose greed makes them dependent on, and dependable for, maintaining the status quo for the top tiers.
As former Sen. Phil Gramm used to say, “There are too many people riding in the wagon and too few people pulling the wagon”
That folksy wisdom was just fine when the mythic image was a minority welfare queen but those same folks aren’t interested in applying that metaphor when the rich are the ones riding in that wagon.
“That folksy wisdom was just fine when the mythic image was a minority welfare queen but those same folks aren’t interested in applying that metaphor when the rich are the ones riding in that wagon.”
Philip S. Zivnuska,
It is so ironic that you mention Phil Gramm in this context, since if you google his history it shows that Gramm lived his life off of the “public teat”, until he fully
sold out to corporate money.
Mike,
Let us not forget Gramm’s wife Wendy:
Enron And the Gramms
By BOB HERBERT
Published: January 17, 2002
http://www.nytimes.com/2002/01/17/opinion/enron-and-the-gramms.html
Excerpt:
When Senator Phil Gramm and his wife Wendy danced, it was most often to Enron’s tune.
Mr. Gramm, a Texas Republican, is one of the top recipients of Enron largess in the Senate. And he is a demon for deregulation. In December 2000 Mr. Gramm was one of the ringleaders who engineered the stealthlike approval of a bill that exempted energy commodity trading from government regulation and public disclosure. It was a gift tied with a bright ribbon for Enron.
Wendy Gramm has been influential in her own right. She, too, is a demon for deregulation. She headed the presidential Task Force on Regulatory Relief in the Reagan administration. And she was chairwoman of the U.S. Commodity Futures Trading Commission from 1988 until 1993.
In her final days with the commission she helped push through a ruling that exempted many energy futures contracts from regulation, a move that had been sought by Enron. Five weeks later, after resigning from the commission, Wendy Gramm was appointed to Enron’s board of directors.
Elaine,
Thanks for the link. It seems that some defeated arguments just never die.
Mike S., you were right that Sen. Gramm not only lived off of the American people, but he made it his goal to ruin the American dream for many of the less fortunate ones who had to pull the wagon.
Trollbot here.
Another day, another 50 gallons of left wing lunatic saliva dribbling from the mental midgets.
Corporations = bad
government = good.
The equation really is
corporations = bad
government = worse.
but you leftists will never get it. You keep thinking the government will in the end, with just the CORRECT group of folks running the place, get everything in line. If only we can get more progressives in office!!! We can then eliminate poverty and crime and make sure no one is hungry or is unhappy or offended. Fools.
Wipe the drool from your chin folks, you are embarrassing yourselves.
“Mike, Let us not forget Gramm’s wife Wendy:”
Elaine,
Thank you for filling out my point so well.
“but you leftists will never get it. You keep thinking the government will in the end, with just the CORRECT group of folks running the place, get everything in line. If only we can get more progressives in office!!!”
Me,
You’re the one that never gets it because you lack the capacity to read and understand what is being written, except in terms of your own pre-conceptions.
You set up “straw men” like the above, based on your misconceptions and then attempt to demolish what isn’t there in the first place. You have never once written anything that has any depth to it regarding your putative political philosophy and merely engage in attacking what isn’t there. If you are not a trollbot, automated program, you might as well be because your range of response is so limited.
My state (Kansas) has a new tax law. Starting January 1, 2013 business owners like me will be totally exempt from state income taxes because we are “Job Creators.” My employees, however, will continue to pay. Adding insult to injury is that my town and the state will socialize taxpayer support for airline traffic so I can fly more cheaply.
Who says there is no free lunch?
Unfortunately, what no one gets is that my business (dentistry) depends on a vibrant, affluent middle class in order to be successful. It will be years before the middle class is recognized as the true job creators. There will be troubled times till then.
Philip,
I understand your problems. The corporate welfare is immense and you are absolutely correct that the economy will never recover completely without a vibrant, working middle class.
BettyKath,
Interesting idea on reasons for executive promotions.
I’ll bring up an example of executive promotion which may be the same as in the USA.
Associate your name as driver of a bold new business venture, ignore its spectacular failure, and move on and upwards through the contacts gotten through advancing your bold new venture.
Do such bold sequences at least three times.
Be promoted to CEO, be afforded board memberships on other major corporations, be promoted to useless board chairman, retire, buy lord of the manorship with suitable mansion, be eased off the boards due to lack of business acumen.
Go to your mansion and sulk.
I am with Tony C on this one. The size of these corporations is the problem. has anyone had a good experience with any of the service of these gigantic corporations? When I call and get some scripted person who lives in India who cannot answer any of my questions, then the whole business model stinks.
People complain that the government is inefficient, but these giant corporations are just as bad when they get to a certain size. Too big to service. Too big to know what is going right and what is wrong. Too big to manage efficiently in all sectors.
Mike Spindell 1, July 23, 2012 at 10:21 am
“Mike, Let us not forget Gramm’s wife Wendy:”
Elaine,
Thank you for filling out my point so well.
=================================
I still need a second on the McDonald’s joke.
shano:
just call the presidents administrative assistant and complain.
I stay this blog so many time, because every time something fresh, and I recited all object your blog, very charming