Tag Archives: defense spending

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.

An Interesting Vote

NPR had a very interesting report this evening.  The House of Representatives voted to stop a 465 million dollar a year program that builds an engine for the f-35 Joint Strike Fighter. This is not the primary engine, which is made by Pratt & Whitney. This is an alternative engine built by GE. Defense Secretary Robert Gates called it “the extra engine” in a Senate hearing. The Bush Administration wanted to kill the program. The Obama administration would also. The Navy, Air Force, and Marine Corps agree. Most importantly the Defense Department says it’s unnecessary and the money could be used elsewhere. The House just did what they all recommended. Why is this an interesting story then? It seems pretty cut and dry.

The interesting part is the vote. It was 233 to 198. The majority of Republicans voted to sustain funding. They voted to keep a program that costs hundreds of millions of dollars a year when the people who benefit from that program want to get rid of it.  This is the party that is currently talking about the need for drastic budget cuts. This is the party claiming to be all about fiscal restraint. House Budget Committee chairman Paul Ryan proposed cutting billions of dollars from programs like HeadStart, and the funding for Pell Grants. Now his party votes to maintain funding for an “extra engine” for a fighter jet we probably don’t even need. Just last year after building 187 F-22 fighters the Defense Department decided they didn’t need them. They would rather put more time and money into the F-35. So now the question is will we need the F-35? Or after billions of dollars spent will they say we need to move on to the next generation? Defense spending has to be brought under control.

That is just a quick thought. I will talk a lot more about defense spending this weekend when I write my opinion on the upcoming budget battle. We will soon see if anyone in Congress is willing to tackle the deficit issue. Likely, we’ll see a bunch of people saying what they think is important to getting elected. Campaign season never really stops these days.