Corporate Traitors – Tax Avoidance is Not Patriotism [COMMENTARY]
A just released Government Accountability Office (GAO) report tells us what we already knew. Our most profitable corporations are tax dodgers. The tax rate for corporations that make more than $10 million is 35%. The average actual rate paid by corporations in this bracket is 12.6%
What this amounts to is roughly $180 billion per year in uncollected tax revenues. Do you think that might help with some of our budget shortfalls?
When you include the businesses that make less than $10 million in profits, the average rate goes up about 5 points. Note that this means that the most profitable companies are paying a smaller share in taxes than smaller businesses are.
Consider your own tax rate. Chances are that if your income is within shouting distance of the middle class, you pay a higher tax rate than our most profitable corporations do.
How do corporations manage this? There are a number of accounting tricks and loopholes available, but the most egregious of them are the ability to avoid taxes by stashing profits overseas or by incorporating there.
Some fairly simple changes to the tax code could change all that, but the current make up of Congress, and especially the House, means that has no chance of happening anytime soon. There is talk of changing the corporate tax laws, but not in the correct way. Reforming America’s Taxes Equitably (RATE), a corporate lobbying group, is fairly successfully pushing to lower the tax rates that corporations would pay.
Amongst the people that RATE has convinced is President Obama, who believes that the top rate should be lowered to 28%, as long as that package includes closing loopholes. This is yet another example of why the people who run around saying Barack Obama is a socialist have no clue what they are talking about. Anyone who wants to lower corporate tax rates is no kind of socialist.
It is instructive that this report came out just before the Fourth of July, because there is a tendency in the country to conflate the tax rebellion of the founding fathers with patriotism more broadly. They were in opposition to taxation without representation, and if the billions of dollars in subsidies to already insanely profitable mega-companies proves anything, it is that corporations are getting plenty of representation.
Every dollar of taxes dodged by corporations either results in deficit spending or damaging cuts to useful programs (ala the sequester). Worse still, it shifts the tax burden over to everyday Americans, who don’t receive big subsidies and are more likely to feel the pinch in reduced government services. Taking profits overseas in order to pay the lower rates available there only weakens our country. There is nothing patriotic about it; it is more like treason.
The opinions expressed in this commentary are solely those of John Gossom and do not reflect Results Radio, Townsquare Media, its sponsors or subsidiaries.