There is a lot of talk right now about the stupidity or wisdom of letting the Bush tax cuts expire. While our government needs money to function (mostly, it seems, to fund unwanted wars that do nothing other than benefit our politically-linked, almighty corporate contractors), keeping tax cuts in place for the wealthiest among us just makes no sense in these recessionary times. In fact, if the economy continues to worsen, not only the U.S., but also the international community will be adversely affected as imports decrease and foreign workers are laid off.
To see just how lopsided and one-sided our tax laws are, just sit down with any of the available software packages and play around a little. Plug in low, middle or high income figures and it is amazing to see what happens. The more money you make, the more loopholes you will see to help you avoid paying taxes.
The problem is that the rich get richer while the people who made America great are losing their jobs and their homes. Two-thirds of the nation’s total income gains flowed to the top 1% of our population. The real kicker is that many of the richest either pay no taxes at all or actually reecive money back in the form of rebates or incentives. When America’s working class gets into trouble, no one is there to give them a hand, yet taxpayers were hit hard by government pickpockets on behalf of the very criminals who put the middle and lower classes into their current financial crisis.
A typical example is General Electric (GE). For tax purposes, the company’s U.S. operations posted a loss of $408 million, while its international businesses posted a $10.8 billion profit. That left GE with no U.S. profit left for Uncle Sam to tax. Clever. Corporations supposedly face a 35% income tax on their earnings, but thanks to legislation allowing certain deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%, giving it the ability to garner a $1.1 billion tax rebate. Anyone can verify this by simply typing “G.E. tax return” into their internet browser.
Since the profit was made overseas and is kept in an overseas bank account for further “investment” within the company, they do not pay any tax at all on this huge profit. When the Bush tax cuts are figured in, what a jackpot!
This is not a singular occasion or an exception either. Out of the Fortune 500 companies, 82 paid NO income taxes whatsoever or, even worse, got a rebate from the government. These are companies that made $102 billion in U.S. pre-tax earnings. With the help of Congressionally-approved loopholes, they actually got $12.6 billion in rebates. Another 275 corporations paid only an average of 17.2 to 21.4% of their profits in taxes, far below the supposed 35% corporate tax rate.
As recently as 1980, corporate tax rates were 73%. Yet, our spoiled and coddled corporations today are screaming bloody murder about a tax rate that is less than half that. When the rate was 73%, our economy was strong. In today’s floundering economy, we need those tax revenues even more before America’s infrastructure and economy collapse completely.
An estimated deficit of $1.3 trillion was created due to those unnecessary tax cuts. Because this money was not paid to the government, “we the people” may lose our hard-earned Social Security benefits and even be the segment of society that will be forced to pay higher taxes to feed the unholy greed of the big corporations.
In the states of Washington, Florida and Texas, the poor and middle class paid higher tax rates than the rich. In Washington, for instance, the poorest 20% of residents pay taxes at a rate nearly six times that of the state’s richest 1%. According to one study, the poor and lower-to-middle classes are bearing the largest tax burden in our country. By what measure of fairness is this allowed to happen?
Breaking it down by the numbers, it looks like this: the wealthiest Americans, just 1% of the population. pay an average of just 5.2% of their income in taxes; the middle class pays at a rate of 9.4%, and the poorest are forced to pay at a rate of 10.9%. Something is horribly wrong with this picture.
It’s easy to predict what will happen when these Bush tax cuts come up for discussion before Congress this fall. The Republicans will once again say “No.” and try to keep the corporations who put them into office from having to pay their fair share of taxes. The Democrats will posture as though they oppose the cuts but will still roll over on their backs rather than protect their constituents. And Congress will thus, predictably, do what it seems to do best for the American citizenry… absolutely nothing.