Obama’s Corporate Tax Scam
This article by Glen Ford is re-posted from Black Agenda Report.
Barack Obama can’t hide the fact that he is the One Percent’s president. Most of what he is dangling for the rest of us this election year turns out to be smoke and mirrors, yet he offers corporations a huge tax rate reduction – a gift that will keep on giving long after Obama is gone. It is typical Obama behavior. He sprinkles his speeches with phrases that mimic Occupy Wall Street, then turns around and promises the One Percent a bigger prize than George Bush could deliver.
Obama wants to lower the nominal corporate tax rate form 35 percent to 28 percent. For manufacturing industries, the rate would fall to 25 percent. Big Business has long complained – dishonestly – that American companies are put at a disadvantage by the highest tax rates in the world. But that’s only true on paper. When it comes to actually paying taxes, European corporations give a bigger share of money back to their governments and societies than U.S. companies do. The fact that the U.S. posts a higher official tax rate, while in the real world U.S. corporations pay lower taxes than Europe, is proof of the absolute corruption of the U.S. tax system, where corporations write the tax code and all of its loopholes.
Obama claims he will extract even more tax money from the corporations by doing away with loopholes. There is absolutely no reason whatsoever to believe that. The administration has no plans to revise the U.S. tax code any time soon.
Private studies show the average company pays an effective tax rate of substantially less than 20 percent, and a government study showed that more than half of American companies paid no taxes at all in at least one out of seven years.
Back in the Fifties, corporate taxes made up 28 percent of government revenues. In the Sixties, the corporate share was 21 percent of each dollar of taxes. Today, corporations only account for ten percent of the money the U.S. government takes in per year. In other words, they have never had it so good.
Hardly anyone outside the administration believes that the Obama plan will wind up collecting more corporate taxes than it gives away. The grassroots National People’s Action projects that permanently lowering the tax rate will cost the federal government $700 billion over the next ten years. The loss in revenue will increase pressures to cut programs that serve people – which is another way of saying that the 99 percent will pay for the tax reductions of the corporate 1%.
Even in the highly unlikely event that the Obama plan winds up collecting more tax money through closing down corporate loopholes, the president has already stated that the additional revenue will go right back into corporate pockets, in the form of new or existing tax breaks for favored industries, in manufacturing, clean energy, and research. This, of course, would be the biggest loophole of all. Under a Democratic or Republican administration, every corporation would claim to be a manufacturer, or to be doing research. And, President Obama can’t say the word “coal” without also saying “clean” – so that dirty industry would get tax breaks, too.
Obama’s whole plan is a tax giveaway, not a tax reform. And, that’s the point. It’s a billion dollar election year. Corporations need to know what kind of government their campaign contributions are buying.