Lowering the Corporate Tax Rate is a Joke: They Can’t Pay Less Than Nothing


I’m going to get into this more this weekend, but let me make a simple argument here. Lowering the corporate tax rate won’t create any jobs in this country. It is that simple.

It’s  been big news lately that GE made a few billion dollars profit in the U.S. last year and yet paid no taxes. This story comes up every year. It turns out that through completely legal tax avoidance, corporations are able to dodge considerable amounts of taxes every year. To put this in perpspective, GE paid no taxes and I paid $783.  I would like my Republican friends explain to me why in God’s name we should lower the corporate tax rate.

The argument is always that we have to lower the tax rate to create jobs. This makes no sense. A large corporation doesn’t create jobs in any one particular place because of the tax rate. They do it for the labor costs. If Corporation A can hire workers in Honduras to effectively do a job for $3 a day, they will NEVER hire an American at $7.25/hr. It’s not going to happen. Jobs are created in this country mostly by franchises and small business. These are businesses that cannot afford to hire overseas or it doesn’t make sense. If you open a McDonald’s in Milwaukee you can’t outsource those jobs to Bangladesh, for example.

I also say if corporations want lower taxes, they’ve got to start paying what they are supposed to. Last year the Democratic House tried to pass a bill that did two things. It provided a fund for 9/11 first responders to obtain healthcare and it would have closed loop-holes in the IRS code that allow corporations to avoid taxes. Republican’s decried it as  a huge tax increase. I complained about it then, and I’m complaining again. Forcing a business to pay their fair share is not a tax increase. It’s tax enforcement.

During the budget debate we often hear people say something like, “My family has to balance its budget. The federal government should too.” Putting aside the fact that most American families are just as in debt as the government is, I wonder why we don’t hear fiscal hawks (mainly conservatives) saying, “I pay my taxes. Corporations should pay their’s too.”

In a time when we’re trying to balance a budget, doesn’t it make sense to ensure the government is getting the tax revenue it’s supposed to? It turns out this isn’t about the budget. As I’ve said before, Republican’s are trying to eliminate government and the services it provides. House Republican’s have put forth spending cuts that would take $600 million from the IRS. Every expert says if you take $600 million from IRS enforcement, you lose $4-$6 billion in tax revenue. How is that fiscally responsible. It’s not, but it does get the IRS off the backs of the wealthy. It gets the IRS off the backs of Congress so they can avoid taxes. How much longer will it be before we hear another Congressman “forgot” to pay thousands of dollars in taxes on something.  We need to get real. Fiscal responsibility is going to require 4 things: reform of Social Security, reform of Medicare, cutting Defense spending, and tax increases targeted at those who can pay more. Until I see Republicans or Democrats or both do those 4 things, I won’t take any of them seriously.

Advertisements

5 responses to “Lowering the Corporate Tax Rate is a Joke: They Can’t Pay Less Than Nothing

  1. This is an outstanding post, and I am happy that I’m not the only voter in Kansas who feels this way! Now, if only we could increase the attention span of other voters, so this sort of thing doesn’t continue to repeat itself cycle after cycle to the great detriment of hard-working small business owners and the American taxpayer (who inevitably picks up the slack).

  2. Very well written article, you are tackling an important issue. Your right, for the wrong reasons. Take the questions you ask:
    “I would like my Republican friends explain to me why in God’s name we should lower the corporate tax rate.” A better question is why is Obama’s friend Jeffrey Immelt’s company paying zero taxes?

    The progressive tax system has been set up in a such a way that it can be used to benefit supports or punish the opponents of the majority in the congress. Both parties play this game and will play this game as long as you let them.

    “I wonder why we don’t hear fiscal hawks (mainly conservatives) saying, “I pay my taxes. Corporations should pay their’s too.”..” You need to listen to conservatives and not Republicans to hear this.

    The truth is that you will not get large corporations to pay taxes by closing “loop holes”. When you close “loop holes”, which are tax credits and tax rebates, it hurts small businesses that can’t afford to contribute to campaigns. You need to attack the idea of enforcing tax collecting from a different way to have success.

    Corporations have a responsibility to support the communities that they do business in through taxes. But we need a tax that they can’t avoid no matter who they pay off.

    Reforming the current tax system will not get us to the goal. It has been the most abused taxed system in its short 90 or so years of existence. We need a new solution for a new economy. Find that solution and get behind it.

    By the way:
    “How much longer will it be before we hear another Congressman “forgot” to pay thousands of dollars in taxes on something.” I hear Geithner is retiring in 2012 so I guess Obama’s next tax cheat will be nominated then, if he wins re-election.

    • Thanks for the comment. You make some interesting points. I am especially willing to believe that some conservatives (as opposed to Republicans) are calling for corporations to pay. I’m just not hearing it. If you could point me in the right direction I would be very happy to read/ listen to what they say. Oh, the quip about Geithner was pretty funny. I’ve never really liked that guy.

  3. “GE is an extreme example of a historical trend: The corporate share of the nation’s tax receipts went from 30 percent in the 1950s to 6.6 percent in 2009.” – from the Daily Beast Cheat Sheet 3/25/11

    So for all of the conservatives out there that miss the post-war “good old days,” here is one piece of that tableau I can be nostalgic for with you.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s