Doug Pibel: Why it’s time for giant corporations to pay their fair share
When I file my tax return and look at the amount of income tax I pay, I can’t help but think of those who don’t pay any taxes at all. Some of them—even though they make money during the year—not only pay nothing but actually get money back. According to one estimate, they cost every single taxpayer $481 a year. And I, for one, am tired of carrying them.
If you agree, I’d like you to join me in working to get these deadbeats to pony up their fair share. I refer, of course, to General Electric, Boeing, Wells Fargo, and a whole list of other major corporations.
That’s right: According to a recent study by Citizens for Tax Justice (CTJ), in the 3-year period from 2008 through 2010, 30 Fortune 500 companies made a profit each year and yet paid zero or less in taxes. Their average tax rate was negative 6.7 percent. They made billions and then, when tax time rolled around, U.S. taxpayers gave them billions more.
We gave the most money to GE. In the three years studied, GE showed a profit just shy of $10.5 billion. Its tax bill…well, you can’t really call it a bill…was negative $4.7 billion. That’s 4.7 billion of the dollars we paid in taxes going into the pockets of GE. The corporation’s tax rate was negative 45.3 percent.
In all, from 2008 through 2010, 78 different companies paid zero or less in taxes in at least one of the three years studied. In a single banner year, Wells Fargo got almost $4 billion from us. Verizon’s two-year take was $1.3 billion.
There’s been a lot of talk in the presidential primaries about cutting the supposedly crippling 35 percent corporate tax rate. President Barack Obama wants to take it down to 28 percent. Mitt Romney aims for 25. Rick Santorum thinks 17.5 percent is the right number. They’ll pay for this tax cut, they say, by closing loopholes.
But since companies routinely pay so much less than the official rate, only Santorum’s proposal would actually represent a tax cut, on average, for the 280 companies Citizens for Tax Justice looked at. True, they found 71 companies that paid more than 30 percent per year. But the average for all 280 was 18.5 percent.
If you think that corporations are going to stand by quietly as their taxes are raised, you haven’t heard about Super PACs and lobbying. “Representation Without Taxation,” a report from U.S. PIRG and CTJ, lays out the facts about corporate spending to influence tax policy. The 30 companies that paid no taxes 2008 to 2010 spent half a billion dollars in the same period on lobbying. Of course, they lobby on any number of issues. But even if every penny of that half billion went for tax lobbying, they saw a return of 21 to 1. There aren’t many investments out there that pay better than that.
And all of us make up for it. In 1955, corporate taxes made up 27.3 percent of federal revenue while individuals paid in 58 percent. By 2010, the corporate share had dropped by two-thirds, to 8.9 percent and the individual contribution had increased by half, to 81.5 percent.
There’s a lot of resentment over taxes. Most of it gets directed at poor people who, the story goes, are dragging the rest of us down by refusing to pay their fair share.
But who, after all, are the real drags on society? People who don’t pay income tax because they’re barely scratching out a living? Or corporations that make billions in profits and then come to us with their hands out?
Last fall, the Occupy movement brought the idea of the wealth divide into public awareness. Politicians and pundits expressed puzzlement over this class warfare. You can help them understand the problem by letting them know that it’s time to end welfare as we know it: It’s time for corporations to pay their fair share.
Doug Pibel wrote about corporate taxation in the current issue of YES! Magazine where he is managing editor.