More taxes or strong nation? You decide
Published 9:28 am Friday, May 20, 2011
Do you have a dollar in your pocket as you read this?
If you do, you have more than the combined income tax liability of GE, ExxonMobile, Citibank, and the Bank of America.
Good for you.
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Actually, you have far more liability than GE, America’s largest corporation. For GE not only had no income tax liability last year, taxpayers gave the company $3.2 billion.
Big oil? While Congress debates how deeply to cut Medicare, or to end it as it is altogether, the Senate this week refused, based upon mostly Republican votes, to end the industries’ tax credits of $4.5 billion per year.
Or how about Intel? Intel paid $51 million last year in state and local taxes. That sounds good, except it was on $13.9 billion in pre-tax domestic income. Intel has won hundreds of millions in property tax abatements and sales tax exemptions in several states, including Arizona.
Of course many of the abatements reduced the amount of money that would have supported Arizona schools, schools now facing severe cuts in spending. Arizona’s 2012 budget cuts $148 million from K-12 and $198 million from public universities.
Yet Intel’s former chief executive, Craig Barrett, criticized Arizona’s education system saying it is so weak the state cannot attract new businesses. Imagine that.
Then there is the Boeing Corporation, the giant aircraft manufacturing company located primarily in Washington State.
Last year Boeing earned more than $4 billion in pre-tax profits, yet received $137 million tax refund from state and local taxes.
And, under threat of relocating manufacturing of its new Dreamliner airplane the company bullied the state into an additional $3.2 billion in tax credits over the next 20 years.
The state gave the credit, only to have Boeing later decide to open its second production line in South Carolina, a state giving even more abatements, credits and contributions … all paid for by South Carolina’s tax payers and all reducing other citizen services.
This move, essentially breaking the Washington tax credit agreement, was argued as necessary by Boeing because the company preferred not dealing with the union employees in Washington.
South Carolina is cutting $900 million from its budget to education and Medicaid in 2012 while granting Boeing tax abatements it cannot afford. What is wrong with this picture?
Two thirds of US corporations paid no income tax last year. Corporate income taxes are the smallest portion of federal tax collections they have been in decades.
In terms of state collections, corporate income taxes comprised 5.4 percent of state collections last year, down from 10 percent in 1980, according to the Census.
Overall, corporate tax revenue has fallen from between 5-6 percent of GDP in the 1950s to 2.1 percent by 2008.
And corporate tax loopholes and tax evasion practices have resulted in approximately $100 million in taxes being hidden each year, cheating the government out of taxable income.
So while some argue our federal budget needs only spending cuts the truth is very different.
The truth is corporate taxes comprise the least amount of federal taxes since the 1950s. Excise taxes have also fallen, from 3 percent in 1950 to 0.5 percent in 2008.
Further, the income tax burden of Americans is at its lowest since 1958, 23.6 percent of income including federal, state, and local taxes, compared to 27 percent of income in the 1970s, ‘80s and ‘90s.
We have starved the government while spending more…contributing at 1950’s rates while spending in the 21st century. Government is leaner now, 8.8 federal employees per 100,000 citizens compared to 10.0 per 100,000 the last three decades. And government collects less 15.5 percent of GDP compared to 18 percent of GDP over the last three decades.
Only a combination of spending cuts and tax increases can ever balance the budget. Period.
Jim Crawford is retired educator and political enthusiast living here in the Tri-State.