Taxes and democracy are two oft-maligned activities that Americans dearly depend on. "Indeed it has been said," noted Winston Churchill, "that democracy is the worst form of government except all those other forms that have been tried from time to time." He might just as easily have been talking about the responsibility of paying taxes.
Two years ago the Supreme Court's misguided Citizens United decision struck down long-standing Congressional limits on the political power of large corporations by vastly expanding the legal metaphor that "corporations are people." Now there is fresh evidence that corporate influence over Congress makes it easy for those same corporations to avoid their civic duty of paying taxes.
A new report identifies thirty Fortune 500 corporations that pay less in federal income taxes than they spend on federal lobbying.
You read that right. These companies - dubbed the "Dirty Thirty" - exploited loopholes in the tax code so aggressively that all but one of them enjoyed a negative tax rate over the three year period of the study, while together spending nearly half a billion dollars to lobby Congress on issues including tax policy. Instead of paying for the public structures such as roads, police and education which make their profits possible, they collected $10.6 billion in tax rebates from the federal government. Had these thirty companies paid the statutory 35 percent corporate tax rate, the Treasury would have collected an additional $67.9 billion.
Every dollar in taxes avoided by these Fortune 500 companies is a dollar that must be cut from public programs, added to the national debt, or paid in the form of higher taxes by ordinary taxpayers.
The companies in the Dirty Thirty include household names like General Electric, Verizon, Mattel, Wells Fargo, Dupont and FedEx. There's no avoiding how the story at each of these companies represents a mockery to both our tax system and our democracy.
The tax data in the report comes from companies' own Security and Exchange Commission filings, which also list some of their subsidiaries in offshore tax havens. By focusing their study only on corporations that reported profits across all three years, the authors ensure that the companies cannot credibly claim these findings merely reflect quirky tax timing or deferrals.
Taxation is like a canary in the coal mine for the post-Citizens United era. Tax legislation is particularly vulnerable to the influence of powerful corporations. Most Americans pay little attention to the arcane rules of corporate taxation. Although special tax giveaways have the same bottom-line effect on the budget as direct spending, they are subject to far less democratic oversight. And unlike direct spending proposals, special tax favors are usually not considered against competing spending proposals or with consideration of how other ordinary taxpayers must pick up the tab. Once tax giveaways are on the books, they usually don't need to be reapproved each year the way budget allocations do. Instead they tend to remain on the books indefinitely unless lawmakers can be strongly nudged by public outrage to remove them.
Towards that end, the study, which is produced by the U.S. Public Interest Research Group and Citizens for Tax Justice, recommends a number of immediate reforms to close offshore tax loopholes and limit corporate money in elections. While working toward overturning the Citizens United decision, these are good steps toward taking back our democracy and our tax system.
Follow Phineas Baxandall on Twitter: www.twitter.com/uspirg
Long ago we fought a revolution to escape subservience to government. Since then, it seems, we have been trying to escape subservience to private economic power. The theme that too few people have too much power is an old one, but the current situation has given this theme a certain urgency now corporations are persons and money is free speech. Sometimes, one wonders if democracy and capitalism are compatible.
Charles A. Scontras
Cape Elizabeth, Maine
http://viableopposition.blogspot.com/2011/09/ceo-excess-how-to-make-more-money-than.html
The compensation packages for many of America's corner office dwellers are bordering on obscene which is leading to a greater division between America's high income earners and the rest of us who break a sweat while doing our jobs.
http://www.uspirg.org/home/reports/report-archives/tax--budget-policy/tax--budget-policy--reports/representation-without-taxation-fortune-500-companies-that-spend-big-on-lobbying-and-avoid-taxes
http://www.news.ku.edu/2009/april/9/taxlobbying.shtml
KU News - Tax lobbying provides 22,000 percent return to firms, KU reseachers find
"LAWRENCE — Three professors at the University of Kansas have found that a one-time tax break allowed several multinational corporations to receive a 22,000 percent return on lobbying expenditures.
The study was conducted by Raquel Meyer Alexander, assistant professor of accounting; Stephen Mazza, associate dean of the School of Law; and Susan Scholz,associate professor of accounting and Harper Faculty Fellow. Mazza recently presented their findings at the Critical Tax Theory Conference, sponsored by the Indiana University Maurer School of Law in Bloomington.
A recent law change provided a tax break to the corporations by lowering their tax rate 85 percent on certain worldwide income. The professors examined the extensive lobbying around the law change and found that for each dollar spent on lobbying, a corporation received $220 in U.S. income tax savings..."
Blessed are the parents whose child says:
"I want to be a lobbyist when I grow up.
http://fdlaction.firedoglake.com/2010/03/29/baucus-thanks-wellpoint-vp-liz-fowler-for-writing-health-care-bill/
Baucus Thanks Wellpoint VP Liz Fowler for Writing Health Care Bill | FDL Action
"...I wish to single out one person, and that one person is sitting next to me. Her name is Liz Fowler. Liz Fowler is my chief health counsel. Liz Fowler has put my health care team together. Liz Fowler worked for me many years ago, left for the private sector, and then came back when she realized she could be there at the creation of health care reform because she wanted that to be, in a certain sense, her profession lifetime goal. She put together the White Paper last November–2008–the 87-page document which became the basis, the foundation, the blueprint from which almost all health care measures in all bills on both sides of the aisle came. She is an amazing person. She is a lawyer; she is a Ph.D. She is just so decent. She is always smiling, she is always working, always available to help any Senator, any staff. I thank Liz from the bottom of my heart. In many ways, she typifies, she represents all of the people who have worked so hard to make this bill such a great accomplishment..."