Because it is the month Americans had to do their taxes (the cruelest month of all), let us find how some giant corporations fare as tax payers:
In its most recent filing, Exxon Mobil Corp., the global energy giant, reported income of $34.8 billion before taxes on total revenue of $310.6 billion for 2009. Its U.S. income tax bill: Zero. Actually, it was a little better than that. Exxon Mobil claimed a tax benefit of $838 million, while it paid $15.8 billion in income taxes to other countries. General Electric Co. did equally well. Its report to the SEC showed income before taxes of $10 billion on total revenue of $155.3 billion. Like Exxon Mobil, GE reported no U.S. income tax paid. And like Exxon Mobil, GE also reported a tax benefit, albeit a little larger at $1.1 billion.This, my friends, is because the US corporate tax rates are too high! It's actually the deductions that corporations are allowed which are too high. Combine that with the flexibility multinational corporations have in deciding where to be taxed and you get the result that a minor goddess pays more taxes than the General Electric. I'm pretty certain that the GE benefits more from the American government than I do. So.
Here's the way conservatives present their demands that corporate taxes should be lowered: The United States has one of the highest corporate tax rates among otherwise similarly situated countries. That makes the US a bad place for business and weakens its international competitiveness.
But corporations in the United States actually don't pay those high taxes because of all the loopholes:
Like others in Congress and the media, Cantor, Bachmann, and Pawlenty insist that American businesses are paying too much in corporate income tax. They claim the onerous tax burden is killing jobs and forcing companies to move abroad. To reverse the nation's fortunes, they say, all Washington need do is slash the corporate tax rate, thereby reducing the amount of taxes these businesses are forced to pay. What's scary is a growing number of citizens believe them.Mmm. So what is to be done to fix this horrible problem? The proposals I have seen want the corporate tax rate to be lowered to, say, 25%, and the loopholes closed, and at least some of them argue that this change, or some similar combination of the two, could be created so as to keep the corporate total tax burden constant.
One of the more egregious falsehoods being peddled by the corporate tax cutters is that companies doing business in the United States are taxed at an exorbitant rate. Not so. Though the United States has one of the highest statutory rates on the books at 35 percent, the only fair way to measure what companies actually pay is their effective rate - what they ultimately pay after deductions, credits, and assorted write-offs. By that yardstick, companies in the United States consistently pay taxes at rates lower than corporations in Japan and many nations in Europe.
Perhaps a more telling yardstick, corporate tax revenue in 2009 came to just 1 percent of gross domestic product - the lowest collection level since 1936, or three-quarters of a century ago. In 2010, it edged up to a puny 1.3 percent - the second-lowest since 1940. Even worse, the shriveled tax collections came at a time when corporations were registering an all-time high in profits. At the end of 2010, corporations posted an annualized profit of $1.65 trillion in the fourth quarter. In other words, the more they made, the less they paid.
But why would corporations so desperately push for such a change if they don't benefit from it? At first glance those proposals would have to hurt the giant corporations, the ones which currently manage to avoid taxes, if the total corporate tax revenue were to be held constant. They are the ones with most current loopholes, after all.
I have not read anything very precise about closing those loopholes. Some mention of that is added like sugar on a bowl of unappetizing oatmeal but the specifics are simply not there. Which makes me fear that any actual lowering of the corporate tax rate would forget all about the loopholes.
Why does any of this matter? Listen to the message in the political background: It is all about belt tightening, all about states cutting back on the care of the frail elderly and on the help for the poor. Schools are being stripped of money, teachers are allowed to let go, all Americans are being told that they should not expect a calm old age because the country simply cannot afford it. Even the president tells us that we must now cut, cut and cut.
Except that for some of us the cuts are different than for others. The corporations should get a tax cut, the rich should get a tax cut, but the rest of us? Cuts in benefits will serve.