“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
“At Odds With Reality”: Three Conservative Myths About Government
The Path to Prosperity blueprint of House Budget Committee Chairman Paul Ryan—the foundation for the budget that the House passed last week—reflects conservative politicians’ war on government. As my Center on Budget and Policy Priorities colleagues conclude about a Congressional Budget Office, or CBO, analysis of the Ryan plan:
The CBO report, prepared at Chairman Ryan’s request, shows that Ryan’s budget path would shrink federal expenditures for everything other than Social Security, Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and interest payments to just 3¾ percent of the gross domestic product (GDP) by 2050. Since, as CBO notes, ‘spending for defense alone has not been lower than 3 percent of GDP in any year [since World War II]’ and Ryan seeks a high level of defense spending…the rest of government would largely have to disappear.
The conservatives’ war is sustained by a series of myths.
Myth No. 1: Spending Is Out of Control, and Only Draconian Cuts Will Rein It In
As my colleagues at the center have shown, however, noninterest spending outside Social Security and Medicare spiked in the Great Recession but is scheduled to fall substantially as a share of GDP as the economy recovers (see chart).
To be sure, government spending will rise as a share of gross domestic product as the population continues to age, healthcare costs throughout the economy continue to rise, and more Americans become eligible for Social Security and Medicare. But, my Center on Budget and Policy Priorities colleagues have written:
When Americans hear talk of the government exploding in size and reach, they don’t usually think this means that more people will receive Social Security and Medicare because the population is growing older or that Medicare will cost more because of factors like the aging of the baby boomers and advances in medical technology that improve health and prolong life but at significant cost. Outside of those demographic and health cost factors, the portrait of a rapidly growing federal behemoth is simply at odds with reality, since costs are shrinking to levels well below their historical averages.
Myth No. 2: The Country Faces a Looming Debt Crisis Due to the Debt Incurred In the Past Few Years
That myth fueled irresponsible brinksmanship over legislation to raise the nation’s debt limit last year, and it stands in the way of meaningful deficit-reduction.
While the policies that Presidents Bush and Obama and Congress enacted to combat the financial crisis and Great Recession helped drive up deficits after 2007, those policies were temporary and will have little effect on deficits and debt going forward. The weak economy and the legacy other policies enacted under President Bush (especially his tax cuts) play a far larger role. Indeed, the Congressional Budget Office calculates that under current law (which calls for the Bush-era tax cuts to expire at the end of this year), deficits would fall over the coming decade as the economy improves, and debt would fall to 61.3 percent of GDP in 2022.
Yes, the gap between spending and revenues will rise again as a share of GDP in later decades if we don’t take prudent action to rein in future deficits. Policymakers and analysts who are not ideologically committed to radically shrinking government recognize that this will require a balanced mix of revenue and spending measures. But such a balanced policy runs up against myriad tax myths, including the following:
Myth No. 3: Americans’ Tax Burden Is High and Rising
That’s certainly the impression the Tax Foundation wants to convey in its latest “Tax Freedom Day” report released earlier this week: “Americans will work 107 days into the year, from January 1 to April 17, to earn enough money to pay this year’s combined 29.2% federal, state, and local tax bill. ”
But notice, the report does not refer to “every” American or the “typical” American. That’s because, as this Center on Budget and Policy Priorities report demonstrates, four out of five U.S. households likely pay a much lower average tax rate than the one highlighted in the Tax Foundation report. Moreover, average federal income rates are at historic lows for typical taxpayers. When total taxes, including federal and state and local taxes, are taken into account, the United States has one of the lowest average tax rates among all industrialized countries.
So, here’s the question:
Are those who advance these myths interested in fixing the deficit and debt problem, as most Americans would hope, or are they conducting a bait-and-switch in pursuit of antitax advocate Grover Norquist’s quest to “reduce [government] to the size where I can drag it into the bathroom and drown it in the bathtub?”
By: Chad Stone, Chief Economist at The Center on Budget and Policy Priorities, Published in U. S. News and World Report, April 5, 2012
“Black-Robed Partisans”: More Outbursts Of Republican Wingnuttery On The Federal Bench
I’m sure you’ve probably heard about this by now, but it’s a pretty remarkable story: a Fifth Circuit Court of Appeals Judge with the silent acquiescence of two colleague on a three-judge panel dealing with a secondary challenge to the constititutionality of the Affordable Care Act freaked out yesterday and demanded that the Department of Justice file an immediate statement repudiating what the judge chose to interpret as the president’s defiance of the power of judicial review. Here is CBS’ Jan Crawford’s updated report after reviewing audio of the incident:
In the hearing, Judge [Jerry] Smith says the president’s comments suggesting courts lack power to set aside federal laws “have troubled a number of people” and that the suggestion “is not a small matter.”
The bottom line from Smith: A three-page letter with specifics. He asked DOJ to discuss “judicial review, as it relates to the specific statements of the president, in regard to Obamacare and to the authority of the federal courts to review that legislation.”
“I would like to have from you by noon on Thursday — that’s about 48 hours from now — a letter stating what is the position of the Attorney General and the Department of Justice, in regard to the recent statements by the president,” Smith said. “What is the authority is of the federal courts in this regard in terms of judicial review?”
Smith made his intentions clear minutes after the DOJ attorney began her argument, jumping in to ask: “Does the Department of Justice recognize that federal courts have the authority in appropriate circumstances to strike federal statutes because of one or more constitutional infirmities?”
Kaersvang replies yes, and Smith continues: “I’m referring to statements by the president in past few days to the effect, and sure you’ve heard about them, that it is somehow inappropriate for what he termed ‘unelected’ judges to strike acts of Congress that have enjoyed — he was referring to, of course, Obamacare — to what he termed broad consensus in majorities in both houses of Congress.”
In asking for the letter, Smith said: “I want to be sure you’re telling us that the attorney general and the Department of Justice do recognize the authority of the federal courts, through unelected judges, to strike acts of Congress or portions thereof in appropriate cases.”
Smith, who got his lifetime appointment from Ronald Reagan, is a conservative judge on a famously conservative circuit, notes ThinkProgress’ Ian Millhiser:
The United States Court of Appeals for the Fifth Circuit may be the most ideological court in the country. When the oil industry’s allies in Congress wanted to protect the industry from drilling lawsuits, they passed a bill trying to force those lawsuits into the reliably industry-friendly Fifth Circuit. When a high school cheerleader sued her school district after it made her cheer for her alleged rapist, the Fifth Circuit ordered the alleged rape victim to pay more than $40,000. When one of the court’s few progressives asked a series of probing questions to a prosecutor during a court hearing, Fifth Circuit Chief Judge Edith Jones yelled at him to “shut up” and asked him if he would like to leave the courtroom.
But Smith’s outburst of wingnuttery was pretty remarkable even by those standards. Orrin Kerr, a contributor to the generally conservative Volokh Conspiracy legal blog, initially called Smith’s gesture “extraordinarily embarassing to the federal judiciary,” and after listening to the audio backed down on that statement only to a small extent:
[T]he tone of the questions was quite different from what I was expecting based on the story. It came off to me as earnest and genuine, not just an effort to score a cheap political point. With that said, the order still strikes me as highly inappropriate: The DOJ lawyer was quite clear as to DOJ’s position, and lower court judges deciding cases based on briefing and argument should not be going outside the record to come up with assignments to litigants based on press releases by politicians in such politically charged matters. It just makes the judges look like political actors themselves, which doesn’t help anyone.
For the most part, though, Smith is enjoying high-fives rather than rebukes from the conservative commentariat. And it’s all a real through-the-looking-glass moment for those of us who remember decades of conservative demonization of the federal courts and the arrogance of “unelected judges” thrwarting the popular will on civil rights, civil liberties, abortion, gay rights, and so on and so forth. Not that very long ago, the late Richard John Neuhaus, considered one of a small handful of the most important conservative thinkers in America, proposed what amounted to a right of revolution against the illegitimate “regime” of federal judges. Not every conservative agreed, but he received a respectful hearing for this extremist position.
But all previous positions, it appears, and all previous standards of appropriate behavior as well, must be abandoned when it comes to the overriding task of opposing Barack Obama. That’s fitting, given that the underlying issue here is Obama’s adoption of the individual health insurance purchasing mandate originally crafted by conservatives.
A lawyer friend of Kevin Drum’s offered him this immediate reaction to the Smith incident:
This is meant to embarrass the President. Full stop. Jesus, this is getting scary. It just seems like all out partisan war brought by the Republicans from all corners of the Government. They want to push it as far as they can. And then further. It’s incredibly destructive.
“They want to push it as far as they can” is a comment applicable to the conservative movement generally in its assault on the conventions of American law and government as generally accepted towards the end of the twentieth century. It’s just a little startling to hear its battle-cries echoed from the federal bench.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, April 4, 2012
“In No Position To Tout Consistency”: Mitt Romney Half Steps To The GOP Nomination
The former Massachusetts governor responds to President Obama with nothing but weak sauce.
In an election year, political speeches have more in common with hip-hop “diss” tracks then they do with anything else. In which case, President Obama’s speech last night was the “Ether” to the Republican Party’s “Takeover”—an assured, aggressive response that methodically destroyed the GOP’s rationale for its slavish devotion to the rich.
Today, I expected Mitt Romney to hit back with a diss of his own. As the presumptive standard-bearer of the Republican Party, it falls on him to make the party’s case against a second term for Obama. In his speech today before the American Society of News Editors, he tried to hit the president on both his record and the tenor of his campaign. And in fairness to the former Massachusetts governor, he makes a few well-placed swipes—it is true that the administration has yet to release a budget, and it is true that Obama has abruptly changed pace on energy issues, accommodating the oil and gas industry in a way that wasn’t true last year.
With that aside, however, the speech fell completely flat. But this had nothing to do with Romney’s delivery—which was actually quite good—and everything to do with the fact that Romney oscillated between contradictions and outright falsehoods. Here the most stunning examples:
“[I]nstead of answering those vital questions, President Obama came here yesterday and railed against arguments no one is making—and criticized policies no one is proposing. It’s one of his favorite strategies—setting up straw men to distract from his record.”
Not only did Mitt Romney praise Paul Ryan’s latest budget—which was adopted by congressional Republicans—but he was a support of last year’s “Roadmap,” and he pledged to sign a Ryan-like budget if it came to his desk. What’s more, in numerous campaign speeches, he has promised to “cut, cap, and balance” the federal budget, referencing a plan to slash federal spending and implement a balanced-budget amendment. If either policy were ever passed, it would have disastrous effects on programs for ordinary Americans. Romney may not have an explicit policy to kick children off of Medicaid or deny food aid to poor families, but if he were to follow through on his ideas and promises, that’s exactly what would happen.
President Obama’s answer to our economic crisis was more spending, more debt, and more government. By the end of his term in office, he will have added nearly as much public debt as all the prior Presidents combined.
If Romney is as knowledgeable about the economy as he says he is, then he must know that the increase in public debt has everything to do with the Great Recession and the drastic reduction in tax revenue that comes with economic collapse. Moreover, there’s the Bush tax cuts, which has kept revenue at historically low levels for more than a decade. If you remove both things from the equation—which, to my mind, is the fair thing to do—then Obama is responsible for far less debt than any of his recent predecessors.
In over three years, [Obama] has failed to enact or even propose a serious plan to solve our entitlement crisis. Instead, he has taken a series of steps that end Medicare as we know it.
He is the only President to ever cut $500 billion from Medicare. And, as a result, more than half of doctors say they will cut back on treating seniors.
It’s hard to overstate the extent to which this doesn’t make any sense. How is it possible to both cut $500 billion from Medicare and fail to enact a plan to deal with our entitlement problems? Presumably, a plan to fix entitlements would contain cuts to entitlement programs. Indeed, if it stands, the Affordable Care Act will implement cuts and attempt to control the overall growth of health spending. If successful, the Congressional Budget Office estimates that the law will save $1 trillion over the next decade. That, to me, sounds like an entitlement plan.
Unlike President Obama, you don’t have to wait until after the election to find out what I believe in—or what my plans are.
The last month has been dominated by questions over Romney’s sincerity. Is he serious about the policies he proposed during the Republican primary, or will he abandon them as soon as he reaches the general election? And if he wins the presidency, there’s no clear sense of which Romney will emerge to take the oath of office; will it be the conservative ideologue who won the GOP nomination, or will it be the moderate businessman who pioneered health-care reform during his last stint in government? The only thing we truly know about Mitt Romney is that he wants to be president and that he’ll say whatever it takes to get there. He’s certainly in no position to tout his consistency.
By: Jamelle Bouie, The American Prospect, April 4, 2012
“Compassionless Christianity Is No Christianity”: A Kinder Mix Of Religion And Politics During Holy Week
The Easter season is a celebration of deliverance, and the liturgical calendar sets Easter Week up as a kind of catharsis.
Holy Thursday and the Last Supper have an ominous feel because they are preparation for Good Friday and the dolorous story of Jesus’s crucifixion. Yet two days later, the tale ends in triumph and resurrection. Whatever questions Christians may have about the meaning of that empty tomb, most of us have experienced a sense of joy when the words “He is risen, alleluia!” are shouted out on Easter Sunday.
Christianity, like the prophetic Judaism with which it is inextricably linked, is rooted in the idea of liberation, and I have long seen the Exodus and Easter as twin narratives involving a release from oppression and the victory of freedom. These promises have left a permanent mark on the culture outside the traditions from which they sprang.
Yet even in the Easter season, it’s hard not to notice that Christianity hasn’t been presented in its own best light during this election year because Christians have not exactly been putting forward their best selves.
My colleague Michael Gerson wrote recently about the “crude” way religion has played out in the Republican primaries, including “the systematic subordination of a rich tradition of social justice to a narrow and predictable political agenda.”
Gerson is exactly right, but I don’t propose to use his admirable column as an excuse to pile onto the religious right. Instead, I want to suggest that what should most bother Christians of all political persuasions is that there are right and wrong ways to apply religion to politics, and much that’s happening now involves the wrong ways. Moreover, popular Christianity often seems to denigrate rather than celebrate intellectual life and critical inquiry. This not only ignores Christian giants of philosophy and science but also plays into some of the very worst stereotypes inflicted upon religious believers.
What I’m not saying is that Christianity should be disengaged from politics. In fact, the early Christian movement was born in politics, in oppositional circles within Judaism fighting Roman oppression. There is great debate over how to understand the relationship between Jesus’s spirituality and his approach to politics, but his preaching clearly challenged the powers-that-be. He was, after all, crucified.
But because Christians have a realistic and non-utopian view of human nature, they should be especially alive to the ambiguities and ambivalences of politics. The philosopher Jean Bethke Elshtain captured this well in reflecting on Augustine’s writings. “If Augustine is a thorn in the side of those who would cure the universe once and for all,” she wrote, “he similarly torments critics who disdain any project of human community, or justice, or possibility.”
Christians, she’s saying, thus have a duty to grasp both the possibilities and the limits of politics. This, in turn, means that the absolutism so many associate with Christian engagement in politics ought to be seen as contrary to the Christian tradition. And that’s the case even if many Christians over the course of history have acted otherwise.
Similarly, some Christians encourage a view of their faith as profoundly anti-intellectual. Faith is seen as more about experience than reason, more about loyalty than dialogue. The desire to assert The Truth takes priority over exploring productively and honestly what the truth might be.
In his important book “Jesus Christ and the Life of the Mind,” the great evangelical scholar Mark Noll urges Christians down the second path. He argues that “if what we claim about Jesus Christ is true, then evangelicals should be among the most active, most serious and most-open minded advocates of general human learning.
“Evangelical hesitation about scholarship in general or about pursuing learning wholeheartedly is, in other words, antithetical to the Christ-centered basis of evangelical faith.” Noll might have added that a devotion to higher learning does not make anyone “a snob.”
So if Easter is about liberation, this liberation must include intellectual freedom. It entails a tempered approach to politics involving a steady quest for human improvement, not false promises of perfection or wild claims about the demonic character of one’s opponents. Elections, even an election as important as this year’s, should not be routinely cast as Armageddon.
Oh, yes, and a compassionless Christianity is no Christianity at all. I have always been moved by this presentation of Jesus from a Catholic Eucharistic prayer: “To the poor he proclaimed the good news of salvation, to prisoners, freedom, and to those in sorrow, joy.” To which one can say: Alleluia.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, April 4, 2012
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