“Under The Money Tree”: Corporations Aren’t The Only Ones Benefiting From Low Corporate Taxes
If you are Exxon Mobil, Verizon or General Electric, chances are filing taxes over the past few years has been significantly less painful than for the average American.
And Sunlight Foundation senior fellow Lee Drutman says that’s because everyday Americans don’t have lobbyists on the hill fighting for them.
“If you think you wound up paying too much in taxes this year, maybe you ought to hire a lobbyist or two or 20,” Drutman writes in a recent report. A Sunlight Foundation study shows that of the country’s 200 largest corporations, the eight companies that dished out the most money for lobbying on Capitol Hill between 2007 and 2010 saw major savings in corporate taxes. Six of the companies even saw a more than 7 percent drop in their tax rate over the years.
AT&T for example, a company that spent more than $70 million on federal lobbying saw a 40.4 percent decrease in their rate, a more than $7 billion savings on corporate taxes. Northrop Grumman’s tax rate also decreased from nearly 33 percent to just over 20 percent after they doled out $57 million for lobbyists to pitch their causes on Capitol Hill.
All together the “Big Eight” paid $540 million for federal lobbying and saved over $11 billion in taxes. Drutman estimates the return on investment to be roughly 2,000 percent.
With all of the changes in tax code, it’s easy to see how companies can save so much in just a few years.
“In 2005, the President’s Advisory Panel on Tax Reform counted approximately 15,000 separate changes to the tax code since 1986,” Drutman said.
And the CCH Standard Federal Tax Reporter, the country’s written tax code document, has more than doubled from 33,000 pages in the mid-1980s to more than 72,000 pages today.
However, corporations are not the only ones benefiting from low corporate taxes.
Drutman says that congressmen who sit on the House Ways and Means Committee, the congressional arm in control of tax regulation, receive about $250,000 more in fundraising contributions than their fellow lawmakers.
“Being on Ways and Means is like having Christmas every day,” says Jeffrey Berry, a political science professor at Tufts University and expert on influence in politics. “They barely have to raise any money. It rains down upon them. They are standing under the money tree.”
By: Lauren Fox, Washington Whispers, U. S. News and World report, April 17, 2012
“Corporations Are People”: How Everyone Else Pays for Big Business’s Tax Breaks
Some politicians might believe that “corporations are people,” as former Gov. Mitt Romney declared last year.
At tax time, however, corporations enjoy better treatment than ordinary folks. While millions of individual Americans file last-minute income tax returns this month, some major corporations won’t pay a dime despite reaping record profits.
From 2008 to 2010, the 280 most profitable U.S. corporations sheltered half of their profits from taxes, thanks to tax subsidies totaling nearly $224 billion, according to a 2011 analysis by Citizens for Tax Justice. A dozen large companies, including Exxon-Mobil, Boeing, and General Electric, reaped $175 billion in profits, but their combined tax rate was negative 1.4 percent, thanks to $64 billion in subsidies from oil depletion allowances, write-offs from overseas profits, and other loopholes, according to the study.
These subsidies didn’t just come about by accident—at least 30 Fortune 500 firms pay their lobbyists more than they pay in taxes. Most small businesses can’t afford lobbyists, so it’s no surprise that the benefits of tax loopholes flow mainly to Wall Street, not Main Street.
Thanks to these loopholes, probably no major company pays the full federal corporate tax rate of 35 percent. The highest three-year average effective rate paid by any of the 12 large corporations in the Citizens for Tax Justice study was 14.2 percent—less than many middle class families.
That’s the kind of sweetheart deal most taxpayers—and most small businesses—can only dream about. We do, however, get to pick up the tab for these costly tax breaks. For starters, when corporations shirk billions of dollars in federal taxes, middle class taxpayers must bear more of the cost of national defense, healthcare, and other necessary programs.
Then there is the effect on state and local services, most notably education.
Most states mirror federal tax loopholes, and many states also provide tax subsidies for companies just to locate within their borders. Total state and local tax subsidies to business add up to about $70 billion a year. That windfall for big business comes at the expense of students. Over the past three years local school districts have cut 238,000 education jobs, which means more students crammed into larger classes and fewer opportunities for extra tutoring or after-school programs. Middle class families have also had to foot a larger share of the bill for higher education, as total state funding has declined 3.8 percent over the last five years.
Small businesses also pay a price for corporate handouts. Not only is the tax burden shifted to companies that can’t afford to game the system, but small businesses rely on public education to train skilled workers and teach them how to think critically. When Spencer Organ Company, Inc. was founded in 1995, many of the people who applied for jobs not only had basic reading and math skills—they also had been exposed to music education and had learned to use tools in shop classes, knowledge that is useful in the organ restoration business. Today, after years of curriculum cutbacks, most students have not had those opportunities, a shift that translates to higher training costs for this small business.
Our nation built the most prosperous economy in history during the 20th century, and public education was a foundation of that success. We all have a responsibility to provide similar opportunities for future generations to succeed, and our biggest corporations must do their fair share. After all, the same people who own stock in these companies also have a stake in America’s future.
By: Joseph Rotella and Dennis Van Roekel, U. S. News and World Report, April 5, 2012
“Roiling The Political Waters”: Supreme Court Has Made Ugly U.S. Politics Even Uglier
The Supreme Court has done the impossible by making American politics even worse than it already was. The bomb that the court dropped on campaigns was the infamous Citizens United decision.
This year the court will decide two cases that will have an immediate effect on federal and state elections. Monday, the court will begin to hear arguments on the constitutionality of the Affordable Care Act. Next stop for the nine justices is a ruling on the constitutionality of the Arizona law that restricts immigration. Both cases could roil the political waters.
But the court’s 2010 Citizens United decision has already changed the complexion of this year’s campaigns. The basis of the court’s decision to allow unlimited corporate political spending was that a corporation is a person and therefore is entitled to freedom of speech under the First Amendment. If a corporation is a person why hasn’t Gov. Rick Perry executed BP for the death and destruction it caused in the Gulf Coast? God knows, real people in Texas have been fried for less.
The court’s Citizens United decision made a bad system even worse.
After the 2008 presidential campaign Americans were already horrified at the negativity of political campaigns. They ain’t seen nothing yet. The extra money that Citizens United has pumped into the political system has exponentially increased the number of negative ads on the air. Voters in the early primary and caucus states are completely shell shocked and the super PACs for congressional campaigns are still waiting in the wings. Former Gov. Mitt Romney’s campaign and super PAC that supports it, Restore Our Future, have a great good cop, bad cop combo. The Romney campaign took the high road while the Romney Death Star completely obliterated former House Speaker Next Gingrich’s candidacy. It couldn’t have happened to a nicer guy.
The avalanche of negative ads has predictably driven turnout down. During the 2008 Democratic slugfest between then-Sens. Barack Obama and Hillary Clinton, voter participation increased. But because there are a lot more negative ads on the air now in the GOP contest, turnout has been down. Because of the scale of the electronic mud wrestling match, the images of all the GOP candidates are soiled. Maybe Mitt Romney’s Etch A Sketch can scrub his image but it won’t be easy to do in the two short months between the GOP convention and November 6.
The rise of the super PACs has also been a godsend for single issue politics. The Gingrich presidential committee ran out of money a couple of months ago and the only thing keeping the former speaker on life support is the more than $20 million that casino mogul Sheldon Adelson and his family has given to the Gingrich-supporting super PAC Winning Our Future. Adelson’s cause is blind American support for anything Israel wants to do, even if those actions threaten our national security. Wall Street bankers and billionaires who have shunned the president because of his efforts to tame corporate abuses have donated millions of dollars to the Romney-supporting super PAC.
Citizens United has also allowed individual millionaires to have a lot of influence on the candidates. Sheldon Adelson is an obvious example the ability of one wealthy person to get a hook on a candidate but there are others. Bob Perry is millionaire Houston homebuilder who funded the Swift Boat Veterans for Truth PAC, which badly wounded John Kerry in 2004. The U.S. Navy should have rewarded the Massachusetts senator another Purple Heart for the beating he took from Swift Boat Veterans. Perry has donated $3 million to the Romney super PAC. Energy investor and noted birth control expert Foster Friess has been a generous donor to the super PAC that supports former Sen. Rick Santorum, The Red, White and Blue Fund. Friess frequently appears standing next to the candidate on the podium at campaign events. So much for Santorum and Friess obeying the law that forbids coordinated strategy between the two of them.
There was a time when the Supreme Court did everything it could to avoid the “political thickets.” That approach has gone the way of of moderate Republicans and clean campaigns.
By: Brad Bannon, U. S. News and World Report, March 22, 2012
“Massive Tax Breaks For The Rich”: GOP Budget Plan To Reduce The Debt Actually Makes The Debt Worse
House Budget Committee Chairman Paul Ryan (R-WI) released the GOP’s new budget this morning, and in doing so, he touted it as a plan to make America’s level of debt more sustainable. “We’ve shared with Americans a specific plan of action that cuts spending, pays off the debt and gets our economy back on the path to prosperity,” Ryan said.
The problem with Ryan’s rhetoric is that his plan fails to match it. By giving massive tax breaks to corporations and the top one percent and preserving unsustainable levels of defense spending, the House GOP’s plan to reduce the debt would fail to reduce the debt. In fact, because it assumes levels of revenue that are pure fantasy under his tax proposals, the plan would actually increase the debt, according to an analysis by Center for American Progress Tax and Budget Policy Director Michael Linden:
But the House budget’s entire claim to deficit reduction is built on the foundation of those fantasy revenue levels. Without them, the debt goes up, not down. In fact, with all the House budget’s tax cuts properly accounted for, revenue would average just 15.3 percent of GDP from 2013 through 2022, not 18.3 percent. The result: deficits would never drop below 4.4 percent of GDP, and would rise to more than 5 percent of GDP by 2022.
The national debt, measured as a share of GDP, would never decline, surpassing 80 percent by 2014, and 90 percent by 2022. By comparison, President Barack Obama’s budget proposal, released in February, would stabilize the debt by 2015, and bring it down to 76 percent by 2022.
As Linden notes, the GOP’s “debt reduction” isn’t just based on fantasy levels of revenue — it’s based on “massive, unrealistic” spending cuts as well. Medicaid would face $1 trillion cuts in the first decade, while education and workforce training programs would get cut in half and transportation funding would be reduced by nearly 25 percent. The plan, which also ignores previous deals and increases defense spending, would also require deep cuts in other vital domestic programs.
“If you agree it’s morally wrong to ignore the most predictable crisis in U.S. history, this is your budget,” Ryan tweeted yesterday. Apparently, though, it seems Ryan and his Republican colleagues got so wrapped up in creating a budget that benefits the top one percent, they forgot to actually reduce the debt.
By: Travis Waldron, Think Progress, March 20, 2012
“Groundhog Day”: The 5 Worst Things About The House GOP’s Budget
After his last attempt at a budget went down in flames last year, House Budget Committee Chairman Paul Ryan (R-WI) unveiled the House GOP’s new budget this morning, painting it as a sensible plan to reform the nation’s tax code and reduce the debt while maintaining entitlement programs like Social Security, Medicare, and Medicaid. Yet again, however, Ryan and the GOP have the social safety net and Medicare in their sights, and yet again, they’re attempting to pass the cost of massive tax breaks for corporations and the rich off to middle and lower-income Americans.
Here are the five worst things about Ryan’s budget:
1. SENIORS WOULD PAY MORE FOR HEALTH CARE: Beginning 2023, the guaranteed Medicare benefit would be transformed into a government-financed “premium support” system. Seniors currently under the age of 55 could use their government contribution to purchase insurance from an exchange of private plans or traditional fee-for-service Medicare. But the budget does not take sufficient precautions to prevent insurers from cherry-picking the the healthiest beneficiaries from traditional Medicare and leaving sicker applicants to the government. As a result, traditional Medicare costs could skyrocket, forcing even more seniors out of the government program. The budget also adopts a per capita cost cap of GDP growth plus 0.5 percent, without specifying how it would enforce it. This makes it likely that the cap would limit the government contribution provided to beneficiaries and since the proposed growth rate is much slower than the projected growth in health care costs, CBO estimates that new beneficiaries could pay up to $1,200 more by 2030 and more than $5,900 more by 2050. Finally, the budget would also raise Medicare’s age of eligibility to 67. Some seniors who would no longer be eligible for Medicare would pick up employer coverage—but they would pay more in premiums and cost sharing. And since the budget would scale back or eliminate other coverage options, hundreds of thousands of seniors would become uninsured.
2. ELDERLY AND DISABLED WOULD LOSE MEDICAID COVERAGE: The budget would eliminate the exiting matching-grant financing structure of Medicaid and would instead give each state a pre-determined block grant that does not keep up with actual health care spending. This would shift some of the burden of Medicaid’s growing costs to the states, forcing them to — in the words of the CBO — make cutbacks that “involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost sharing by beneficiaries—all of which would reduce access to care.” The block grants would reduce federal Medicaid spending by $810 billion over 10 years, decreasing federal Medicaid spending by more than 35 percent over the decade. As a result, states could reduce enrollment by more than 14 million people, or almost 20 percent—even if they are were able to slow the growth in health care costs substantially.
3. THIRTY MILLION AMERICANS WOULD LOSE HEALTH COVERAGE: The budget repeals the Affordable Care Act’s requirement to purchase health insurance coverage, the establishment of health insurance exchanges and the provision of subsidies for lower-income Americans, the expansion of the Medicaid program, tax credits for small businesses that provide insurance coverage. As a result, more than 30 million Americans would lose coverage and the budget would eliminate the new law’s consumer protections, which have already benefited tens of millions of Americans.
4. CORPORATIONS AND THE RICH WOULD GET A $3 TRILLION TAX CUT: By repealing the Alternative Minimum Tax and the investment taxes in the Affordable Care Act and lowering the top income tax rate to 25 percent, the Ryan budget provides the wealthiest Americans with $2 trillion in tax breaks. By lowering the top corporate tax rate and allowing corporations to return profits made overseas to the United States at no cost, he gives corporations more than $1 trillion in tax breaks. Ryan insists his plan will be revenue neutral — he just won’t say how. The CBO’s scoring of the plan, meanwhile, is based on Ryan’s own assertions that the plan would maintain or increase revenue.
5. DEFENSE BUDGET WOULD GET A BOOST, WHILE THE SAFETY NET IS CUT: The Ryan budget protects defense spending from automatic cuts agreed to in last year’s debt deal, then boosts defense spending to $554 billion in 2013 — $8 billion more than agreed upon in the deal. At the same time, it asks six Congressional committees to find $261 billion in cuts. That includes $33.2 billion from the Agriculture Committee, meaning food stamps and other social safety net programs are likely to face cuts, all while the Pentagon remains untouched.
By: Igor Volsky and Travis Waldron, Think Progress, March 20, 2012
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