Pursuant to the recent debt ceiling agreement, Congress has begun setting up what's officially called the Joint Special Select Committee on Deficit Reduction. Much of the speculation about what this committee will do has centered on two questions: Will it cut essential programs like Medicare, Medicaid and Social Security? Will it raise taxes on the wealthy?
Two recent reports from my colleagues at The Greenlining Institute give good reasons why the committee should consider a different approach entirely.
The first, "Corporate America Untaxed," documents the vast degree to which major U.S. corporations avoid paying federal income taxes by hiding profits offshore. My colleagues Samuel S. Kang and Tuan Ngo found that 77 of Fortune 100 companies have at least one operation in countries that are designated as tax havens -- places like Bermuda and the Cayman Islands where very little business actually goes on, but corporate taxes are minimal or nonexistent. Today, Americans on average pay over 20 percent of their income in federal taxes, while Exxon pays 14 percent, IBM pays less than four percent, and General Electric and DuPont paid virtually nothing in income tax last year.
How much lost tax revenue are we talking about? Estimates have ranged between $60 billion and $100 billion a year. Cracking down on these offshore tax havens could bring in $1 trillion over the next decade -- two thirds of the savings the committee is charged with finding -- without raising taxes on any individual American and without cutting benefits that the elderly and poor depend on for survival.
Adding insult to injury, many of these companies get huge contracts from the federal government. Our taxes contribute billions of dollars to the income of firms that duck their responsibilities by funneling profits offshore.
All this is made more urgent by the picture painted by another recent Greenlining report, "The Economic Crisis Facing Seniors of Color." While many Americans have found their retirement nest eggs battered by the economic downturn, some groups are in far worse shape than others, to the point of facing genuine crisis. And because standard measures like the federal poverty level don't include factors that disproportionately affect elders, many who are struggling financially never get counted in official poverty statistics.
Using the most accurate data available, an astonishing 91 percent of African American and Latino seniors are financially vulnerable. While data on Asian Americans is more sparse, some Asian ethnic groups have poverty rates three to four times that of whites.
There are lots of reasons for this, including the fact that Latinos, African Americans and Asians are all less likely than whites to be working at a job that offers a retirement plan. They also tended to have more of their wealth tied up in their home as real estate values tanked and millions faced foreclosure.
But the bottom line is that there are millions of Americans at or approaching retirement age who have essentially nothing to fall back on besides Social Security and Medicare. If benefits are cut or eligibility reduced or delayed, the results won't be statistics on a chart. They'll be actual human beings -- elderly, often frail human beings -- sleeping in alleys and eating dog food.
America can do better than this. Before it even thinks about cutting programs that literally keep people alive, the congressional special committee should make sure that the IBMs and General Electrics of the world pay their fair share. And companies that evade taxes shouldn't get one dime of taxpayer-funded contracts.
Follow Preeti Vissa on Twitter: www.twitter.com/Greenlining