Corporate Liars and the Lies They Tell

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

71 thoughts on “Corporate Liars and the Lies They Tell”

  1. “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.

  2. 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.

  3. 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.

  4. 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.

    1. “Mike, Let us not forget Gramm’s wife Wendy:”

      Elaine,

      Thank you for filling out my point so well.

  5. 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.

    1. “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.

  6. 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.

  7. 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.

  8. 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)

  9. 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.

  10. 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.

  11. 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.

  12. 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?

  13. 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.

  14. 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.

  15. 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.

  16. 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

  17. 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?

  18. 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.

  19. 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?

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