This coming April 15th, as you sadly trudge to the post office to mail off your check to the IRS, here are some little facts that may put a spring in your step and a smile on your face. Well, all of this joy will happen if you're of a mind to enjoy paying taxes on your weekly paycheck and knowing that Corporate America is not only often paying absolutely no taxes at all and, in some heart warming instances, actually receiving refunds.
Let's look at some interesting figures based on the government's own records, shall we?
First, the tax rate for corporate earnings is 35%, according to the IRS. Nevertheless, in 1998, the average tax rate paid by the 250 surveyed corporations was just 20.1%. That's a heck of a lot less than the 26.5% they paid in 1988 before their bean counters figured out ways to avoid the loopholes Congress closed in the 1986 Tax Reform Act but still far less than their share ( 1 )
Now, down to the nitty gritty of the problem. Between 1996 to 1998, there were 41 corporations that paid less than zero taxes. How does one pay less than zero taxes? Quite simply, on a reported $25.8 billion in pretax profits, these corporations saved $9 billion that should have gone to the government by manipulating the huge tax breaks from your Republican Congress and was, in fact, able to receive $3.2 billion in refund checks. That's right, folks! After figuring out their yearly profit, they added even more to it.
Now, put your thinking caps on, boys and girls, and try to part the mists of the media's silence and see just who in America paid the taxes that wound up back in the pockets of Corporate America. Could it be (GASP!) you and I?
Okay, seeing as how I may be attacking some corporations that are really in need of these tax breaks just to stay competitive in today's GLOBAL MARKET (spoken in a deep, reverential voice), let's take a gander at which individual corporations these may be. Let's see now, there's Texaco, who just bought out Mobil Oil Co., and Chevron and CSX, and PepsiCo and Pfizer and J.P.Morgan and Goodyear and Enron and General Motors and Phillips Petroleum and Northrop Grumman and on and on and on.
Okay, I hear you thinking, maybe there are extenuating circumstances. Well, in regards to the oil industry, they are raking in record breaking profits from obscenely priced oil and natural gas and heating oil and the like and have been ever since America lost the Reagan Revolution. In fact, the petroleum industry was the least taxed segment of our economy with an effective rate of only 12.3%. In 1998, the industry outdid itself when the big twelve oil corporations paid only 5.7% on those huge profits.
Of the 250 corporations in the study, 133 paid less than half the 35% tax rate that was due at least one of the years and many were able to manipulate the system more than once. During those three years, the actual taxes that were paid on $209 billion was a mere 8.5%.
The total taxes that were not paid totaled $98 billion. Nearly half of that unimaginable sum went to just 25 corporations with General Electric receiving the most at $6.9 billion over those three years.
How, by the by, did General Electric "earn" such a sum in tax breaks? Through a complicated form of "leasing", in which it buys tax breaks from other corporations that have more than they can use. It also cuts its fair share of taxes by doing business in Puerto Rico, using truly excessive depreciation credits on it's assets, for oil drilling, and research.
Another tax break that was snuck past even me in the last few years is one in which the exercising of stock options by executives of a corporation is taken as a tax deduction (the market value of the stock minus the cost of the stock paid by the executive). When the corporation reports its profits and losses, this is then not treated as a business expense, meaning that the executives of the companies receive a vast profit from these stocks, the IRS receives less revenue since the difference is considered a tax loss, and the stock holders are none the wiser about the expenses that the corporation actually incurs.
What is most stunning about this entire transfer of wealth from your pocket into the pockets of corporations is the discrepancies between the tax rates paid by corporations within the same industries. For instance, although Maytag and General Electric compete in the appliance market, Maytag paid the legal 35% on their profits but GE got away with paying only 8.1% on theirs. Both Abbot Laboratories and Pfizer compete in the drug industries but Abbot ended up paying 29% on their profits while Pfizer got away with paying a paltry 3.1%.
For those of you old enough to remember a little tax law that was enacted in 1969 and called the Alternative Minimum Tax, you may be wondering just how any corporation could get away with paying less than zero taxes since this law was enacted to keep just that from happening. Well, as always you can thank your generous Congress who, in 1993 and again in 1997 passed legislation that pretty much gutted the act and, thus, allowed the system to transfer your wealth into the pockets of the already filthy rich. ( 2 )
So, what have we learned today, boys and girls? We've learned that owning your very own government pays off in many splendid ways. We've learned that those nasty little people who constantly whine about Social Welfare being a transfer of wealth from the rich to the poor probably might take offense at the suggestion that Corporate Welfare like this is just a transfer of wealth from the poor to the wealthy. We've also learned being wealthy means never having to say you're sorry for stealing the taxes that rest of us have to pay. Finally, we've learned that, if there ever existed a shred of decency in the shriveled souls of corporate executives and their property in Congress, it fled those dark and damaged hovels long ago.
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