To Fix The Budget Deficit, Raise Corporate Taxes
Washington is a town currently gripped by deficit hysteria. Various commissions and congressional “gangs” have formed (and broken up) with the goal of crafting a plan to bring the nation’s budget into balance. Even the media has been sucked into this vortex, dedicating far more of its time to covering the deficit than other economic issues, such as unemployment.
At the same time, both parties seem to agree that the nation’s corporate tax code needs to be reformed. President Obama and House Budget Committee Chairman Paul Ryan each dedicated a portion of their respective budget plans to overhauling the federal corporate income tax, which is high on paper, but so riddled with loopholes, deductions, and outright giveaways that few corporations pay the full statutory rate (and several corporations pay no corporate income tax at all).
This, then, should be an excellent opportunity to kill the proverbial two birds with one stone: cleaning up the corporate tax code, lowering the corporate tax rate, and still raising more revenue that can be put towards deficit reduction.
But no.
Despite all the hyperventilating over the deficit, both Republicans and Democrats have said that they want corporate tax reform to be revenue neutral, meaning no more or less revenue will be raised by the new system than was raised by the old. President Obama and Treasury Secretary Tim Geithner have each extolled the virtues of deficit-neutral corporate tax reform. But if this is actually the road that’s taken, it will constitute a colossal missed opportunity.
At the moment, corporate tax revenue has plunged to historic lows. In 1960, the corporate income tax provided more than 23 percent of federal revenue; the Office of Management and Budget estimates that it will provide less than 10 percent this year.
During the 1960s, the United States consistently raised nearly 4 percent of GDP in corporate revenue. During the 1970s, the total was still above 2.5 percent of GDP. Now, the U.S. raises less than 1.5 percent of GDP from the corporate income tax. As the Congressional Research Service put it, “Despite concerns expressed about the size of the corporate tax rate, current corporate taxes are extremely low by historical standards.”
The United States effective corporate tax rate is also low by international standards (though the 35 percent statutory rate is the second highest in the world). There are plenty of reasons for this drop, but chief among them is the proliferation of loopholes and credits clogging up the corporate tax code (alongside the growing use of offshore tax havens and the ability of corporations to defer taxes on offshore profits indefinitely).
Huge corporations, such as ExxonMobil, have recently had years where they paid literally nothing to the U.S. Treasury, despite making huge profits. The New York Times made waves by finding that General Electric paid no federal income tax last year, instead pocketing hundreds of millions of dollars in tax benefits. Mega-manufacturer Boeing has done the same, paying no federal taxes in 2009 while collecting $132 million in tax benefits. Google last year had a 2.4 percent effective tax rate, while California-based Broadcom’s rate was just 1.4 percent, far below the rate that the average American pays.
The Treasury Department estimated in 2007 that corporate tax preferences cost $1.2 trillion in lost revenue over a decade. So there is ample room to remove credits and deductions (like those that benefit, amongst others, hugely profitable oil companies and agribusinesses), lower the statutory rate, while still bringing in more revenue. Some companies would see their taxes go up, but others would see their tax bills drop, and the corporate tax code would be more fair, efficient, and competitive, while ensuring that all corporations pay their fair share.
As the Center on Budget and Policy Priorities put it, “corporate tax reform is a solid candidate to make a contribution to fiscal improvement … Taking a major revenue source off the table for deficit reduction at the outset would be ill-advised.” Indeed, with corporate profits skyrocketing—up 81 percent over a year ago—and corporations sitting on trillions in cash reserves, there is no reason that corporate tax reform should be done in a way that is deficit neutral, besides the fact that raising more revenue will be politically difficult, as corporations will likely throw their considerable lobbying weight against such a move. But in the end, failing to raise additional corporate tax revenue will simply shift more of the deficit reduction burden onto a middle-class already battered by the Great Recession.
By: Pat Garofalo, U. S. News and World Report, May 25, 2011
The Continuing Fight Against Women: House Passes Amendment To Defund Medical Schools That Teach Abortion
Not content to defund health care for women, the Republicans in Congress, who just can’t stop obsessing about abortion, have now passed yet another bill, brought to us by the lovely Rep. Virginia Foxxxxxxxxx, to prohibit government funding of abortion. Only this one also bans medical programs that receive government dollars from even teaching students how to perform abortions. Because taxpayers shouldn’t have their hard-earned dollars spent on training doctors to provide health care to women.
And, in case we didn’t get the message the first gazillion times Republicans mentioned it, the amendment re-reiterates that taxpayer dollars should not be used to fund abortions. Which they aren’t.
But despite the endless parade of bills to make it really, really, really clear that taxpayers should not pay for abortions, Rep. Foxxxxxxxxxx still wanted to make it “crystal clear.” In case the bill they passed three weeks ago didn’t quite get the message across.
The measure is an amendment to H.R. 1216, the Republicans’ latest never-gonna-happen attempt to repeal the Affordable Care Act. Because nothing creates jobs like passing ideologically-driven symbolic measures to appease teabaggers and woman-haters everywhere.
Next up: a bill to ensure that taxpayer dollars are not used to repair roads that lead to medical schools that teach doctors how to perform abortions, and to re-re-reiterate that taxpayer dollars should not be spent on abortions. And then I’m sure they’ll get around to that jobs, jobs, jobs thing.
By: Kaili Joy Gray, Daily Kos, May 25, 2011
Netanyahu Speech To Congress Shows America Will Buy Anything
A blistering piece of commentary by the esteemed (and leftist) Israeli political commentator, Gideon Levy, in Haaretz today is a must read for anyone who cares to see what progressives in Israel think of Netanyahu’s show today before the U.S. Congress.
Levy begins his piece with these loaded, and to my mind, honest salvos concerning Netanyahu’s speech to Congress today:
It was an address with no destination, filled with lies on top of lies and illusions heaped on illusions. Only rarely is a foreign head of state invited to speak before Congress. It’s unlikely that any other has attempted to sell them such a pile of propaganda and prevarication, such hypocrisy and sanctimony as Benjamin Netanyahu did.The fact that the Congress rose to its feet multiple times to applaud him says more about the ignorance of its members than the quality of their guest’s speech. An Israeli presence on the Jordan River – cheering. Jerusalem must remain the united capital of Israel – applause. Did America’s elected representatives know that they were cheering for the death of possibility? If America loved it, we’re in big trouble.
As Levy notes, Congress today applauded some painful statements by the Israeli head of state, and this applause said much about both their ignorance on the true state of affairs in Israel as well as their willingness to remain ignorant about the true state of affairs in Israel for political gain (see: the vote of Christian conservatives and the campaign contributions of the Jewish elite).
Below is a brief look at a few of the standing ovations Netanyahu received by our representatives in Congress, and why such applause should be troubling for us as American progressives:
1. Jerusalem as Israel’s Undivided Capital – by applauding this statement by Netanyahu, our leaders essentially applauded the death of any possible peace agreement, for, as everyone knows, East Jerusalem is the proposed capital for a future Palestinian state in every iteration of negotiations that have been produced since Oslo. And yet, a standing ovation. And it bears noting: with the Arab Spring spreading throughout the West Bank and Gaza, and a declaration of Palestinian statehood on the horizon by the U.N. in September, the death of peace negotiations no longer mean what they once did: the status quo. Instead, such a death will mean major instability with unpredictable outcomes.
2. Israel is not occupying the West Bank – when Netanyahu claimed, with a straight face, that the Jewish people are not occupiers, and that the situation in “Judea and Samaria” is not an occupation, Congress roared to its feet. That the U.S. Congress could rise in boisterous applause to a known lie is chastening – Israeli leaders past, including Ariel Sharon, have admitted the obvious: that Israel is in the difficult and damaging position of occupying another people’s land.
3. Boasting on the Status of Israeli-Arabs – Netanyahu’s government has backed a series of anti-Palestinian, anti-democratic laws recently, the most notable of which forbid citizens from recognizing, in any way, The Nakba (which is the sorrowful observance Palestinians engage in as Israelis celebrate Independence Day). By applauding, our leaders, wittingly or not, gave sanction to a leader and an administration which has done much to strip non-Jewish citizens of their democratic rights.
Netanyahu’s speech today, more than anything, signaled the official death of the peace process, for none of the “terms” presented by Israel’s leader comes close to acceptable for the Palestinians.
And by standing to applaud 29 times, our leaders today gave sanction to that death. Even the White House, this evening, issued a statement saying that Netanyahu’s speech “reaffirmed the strength of U.S.-Israeli relationship.”
Here’s why what happened today matters: America has incredible leverage with regard to Israel, and has always been capable of using that leverage to talk Israel down off the pathological ledge it’s been toeing for so long due to my peoples’ existential fear of annihilation. (For good reason, I should add, but I digress.) The United States gives Israel unprecedented monetary, military and diplomatic support, all of which could easily be drawn down.
But as we saw today, the tail unfortunately wags the dog. And this wagging may end up being disastrous not only for Israel, but for American interests in the region as well, for a Netanyahu-applauded vision of Israel-Palestine is nothing more than a recipe for confrontation, for instability like we’ve never seen.
The Arab Spring has changed dynamics such that there is no going back. If Netanyahu, and America, stay on the course articulated today, this is where we may be headed:
1. A Palestinian declaration of statehood by the U.N. in September
2. Israeli & American rejection, with possible annexation of lands
3. A conflict that will not end well.
May my analysis be wrong. I hope such is the case. I fear such a case is becoming increasingly unrealistic.
By: The Troubadour, The Daily Kos, May 24, 2011
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