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NationofChange / Op-Ed
Published: Monday 21 May 2012
“While corporate profits have doubled to $1.9 trillion in less than ten years, the corporate income tax rate, which for thirty years hovered around the 20-25% level, suddenly dropped to 10% after the recession.”
How the Ultra-Rich Betray America
The betrayals come in many forms. Here are a few of the more outrageous, and destructive, examples:
Evasion: Corporations suddenly stopped meeting their tax responsibilities
While corporate profits have doubled to $1.9 trillion in less than ten years, the corporate income tax rate, which for thirty years hovered around the 20-25% level, suddenly dropped to 10% after the recession. It has remained there for three years.
We are seeing a manifestation of the Shock Doctrine. Corporations are using the national emergency of the financial collapse to make a statement about taxes, and a traumatized nation is too preoccupied to do anything about it.
Delusion: Technology companies won't admit that much of their 'innovation' is due to public assistance
According to the report Funding a Revolution, government provided almost half of basic research funds into the 1980s. Federal funding still accounted for half of research in the communications industry as late as 1990. Even today, the federal government supports about 60 percent of the research performed at universities.
Apple's first computer was introduced in the late 1970s. Apple still does most of its product and research development in the United States, with US-educated engineers and computer scientists.
Google's business is based on the Internet, which started as ARPANET, the Defense Department's Advanced Research Projects Agency computer network from the 1960s. The National Science Foundation funded the Digital Library Initiative research at Stanford University that was adopted as the Google model.
Apple got its tax bill down to 9.8% last year. About 2/3 of its profits remain overseas for tax avoidance purposes. Google, like Apple, avoids taxes by moving most of its foreign profits through Ireland and the Netherlands to Bermuda. Both Apple and Google, along with Microsoft and Cisco, are lobbying for a repatriation tax holiday to allow billions of overseas dollars to come home at a greatly reduced tax rate.
An Apple executive said: "We don't have an obligation to solve America's problems." That may be true, but they do have an obligation to pay the taxes that help America solve its problems.
Desertion: The people who benefit most from government are renouncing their citizenships to avoid taxes
Perhaps the ultimate insult to America is to just quit on your country after making a fortune off of it. In 2011 almost 1,800 Americans gave up their citizenship to avoid taxes.
The wealthy benefit disproportionately from property and inheritance laws, contracts, stock exchanges, favorable SEC regulations, the Small Business Administration, patent and copyright and intellectual property laws, estate planning, trust funds, Internet marketing, communications infrastructure, highway maintenance, air traffic control, local and national security, and 60 years of research in technology and other industries.
A recent outrageous example is Facebook part-owner Eduardo Saverin, whose family came to America from Brazil partly for safety reasons, and who happened to land Mark Zuckerberg as a roommate at Harvard. Now after falling into billions, he's decided to renounce his U.S. citizenship to avoid taxes.
Denial: Traders feel it's inappropriate to pay even a tiny tax on a quadrillion dollars in sales
A quadrillion dollars sounds like a fake amount. But it's all too real. That's a thousand trillion dollars of derivatives transactions which, along with the high-frequency computer-generated transactions (5,000 per second) that make up over half of U.S. stock trades, contributed to a financial meltdown and a $3 trillion bailout for reckless trading.
But there's no tax on these transactions.
While average Americans pay a 10% sales tax on necessities, millionaire investors pay just a .00002% SEC fee (2 cents for every thousand dollars) for a financial instrument. And their supporters claim, inexplicably after the disastrous trading frenzy in 2008, that a tax would increase volatility.
Illusion: The media leads us to believe we should all be cheering when the stock market is booming
Conservatives insultingly assure us that the "democratization of stock ownership" is gradually making America more equal, as evidenced by the flattening of wealth ownership among the richest 1% in recent years. So we should all be excited about a rising stock market.
Here are the facts. Data from Edward Wolff confirms that from 1983 to 2007 the percentages of net worth and financial wealth for the top 1% remained steady. But the percentages for the rest of the richest 5% increased by almost 20%, while the percentages for the lowest 80% of the population DECREASED by almost 20%.
In other words, the share of wealth owned by the top 1% leveled off because the "democratization of stock ownership" spread the wealth among just 5% of the population, those earning an average of $500,000 per year. A few people -- 5 out of 100 -- got very rich, but everyone else lost ground.
Conclusion
The issues are difficult to address with Congress largely on the side of the wealthy. At the very least:
(1) Eliminate the tax break on unearned income (capital gains). The richest Americans, who own most of the stocks, should not pay a smaller tax than everyone else.
(2) Implement a small financial transactions tax. It would be easy to administer on computer trades, it would generate hundreds of billions of dollars in revenue, and it would help guard against the reckless speculation that devastated the financial markets and our country.
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ABOUT Paul Buchheit
Paul Buchheit is a college teacher with formal training in language development and cognitive science. He is the founder and developer of social justice and educational websites (UsAgainstGreed.org, RappingHistory.org, PayUpNow.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.
18 comments on "How the Ultra-Rich Betray America"
May 27, 2012 2:17pm
There is some truth here but it is horribly one-sided. GE paid ZERO taxes and why, you ask? Because Obama has GE's CEO in his cabinet. Coincidence? No.
Further, democrat former NJ governor Jon Corzine stole billions of dollars from a hedge fund yet he is still free. Why? Because he is politically connected to Obama.
So before all you "Silent Majority" types start acting holier than thou, you'd better look at both sides before voting. We have a Demican/Republicrat system bought and paid for by Wall St Money and Corporations.
May 21, 2012 10:47pm
Small businesses, professionals, employees and retirees all complain but we pay our taxes to make this country work. Cut off the loopholes, subsidies and exceptions for the big corporations and let them pay their share of the taxes to make this country work.
May 21, 2012 7:28pm
Anyone who gives up their US citizenship should be deported and put on the banned list. They are worse than Al Qaeda! Do not allow them to return, not even for their mother's funeral! I hate it when I get this pissy but giving up one's citizenship for money is just disgusting. No take backs either and don't let the door hit you in the a**. If the 99% refused to buy from those companies, they would be hurting in the long run. There are plenty of small companies out there with great products being made right here who believe in us, support them instead. Granted you can't buy a phone made here in the states but what would happen if we kept our old ones, had them repaired and bought used ones instead of buying new ones? We used to get things repaired instead of just throwing them away.
May 21, 2012 4:29pm
An Apple executive said: "We don't have an obligation to solve America's problems."
People swallow this mindless rhetoric without thinking. Translated into reality, what Mr Apple Executive means to say is "We don't have any obligation to America".
Much like tumor.
May 21, 2012 3:55pm
People across American have an illness- it's called amnesia- they conveniently forget who caused the financial meltdown and cause the downturn in the economy- uhmmm- and got us into two wars on credit. let the "loan shark banks" produce complicated financial schemes sure to fail- and while the corporations and the wealthy got even richer - the rest of America's middle class fell into despair as unemployment and upside down mortgages wiped out their little nest egg- and the increase of poor and homeless people-but you still hear these very same people screaming at Obama and his policies, some of which have been put in place to protect the very same people from predatory lending hidden fees, to name a few - People are Waking Up though-
May 21, 2012 1:08pm
Excuse me - this traumatized nation has NON-leaders that refuse to lead. They have been bought and paid for, and don't care about WE, the People!
Apple and Google run with employees trained in the US, their research was paid for by the American Taxpayer, yet they are screwing us over by hiding their profits overseas - they are all take, take, take screw us over!
These "citizens" that are renouncing their citizenship to avoid paying taxes should have their assets confiscated, then deported.
There should be a trading tax on all stock exchanges, purchases or sales, 2% would be a good figure to start with. DO NOT CALL IT A TRANSACTION TAX. It is only on stock/bond transactions.
This was up before, tea baggers had everyone convinced it was a tax on ALL bank transactions for WE, the People, including direct deposit of pay, SS benefits, or anything else.
It is a Stock/Bond Transfer Tax - call it such.
May 21, 2012 7:32pm
I did not know that the tea pots were saying this. The stupidity of that group never ceases to amaze me. Thanks for the trivia, I'll keep it for future debates.
May 21, 2012 12:15pm
Bribing influence-peddling Congresspeople, state legislators, presidents, governors, "judges", regulatory authorities, et.al. must be punishable by mandatory prison terms -- removing special interest money from the electoral, legislative, and "judicial" processes must be a first priority with the voters if we want to end the tyrannical fascist plutocracy/corporate kleptocracy and reinstate a representative democracy in Amerika.
Citizens United must be abolished permanently, and the rich should pay their fair share of taxes because it is a moral obligation of living in a civilized society.
May 21, 2012 11:48am
Not only a 50% fee on these freeloaders, deport them. Since they made their fortunes in America and want to give America the shaft, turn the tables. Break them then deport their sorry beings to any country that doesn't think they would do the same to them. These are traitors and deserve nothing.
May 21, 2012 7:35pm
Forbid the children of traitors to attend American schools.
May 21, 2012 11:13am
The ultimate insult to America is to just quit on your country after making a fortune off of it. In 2011 almost 1,800 Americans gave up their citizenship to avoid taxes. I say that for any Individual, Corporation, Compay, Institution, or Organization that would leave the United States of America to avoid paying taxes, that we should create a 50% Tax Penalty for them to remove any monies from the United States of America.
The wealthy benefit disproportionately from property and inheritance laws, contracts, stock exchanges, favorable SEC regulations, the Small Business Administration, patent and copyright and intellectual property laws, estate planning, trust funds, Internet marketing, communications infrastructure, highway maintenance, air traffic control, local and national security, and 60 years of research in technology and other industries.
Here are the facts. Data from Edward Wolff confirms that from 1983 to 2007 the percentages of net worth and financial wealth for the top 1% remained steady. But the percentages for the rest of the richest 5% increased by almost 20%, while the percentages for the lowest 80% of the population DECREASED by almost 20%.
Income Tax Reform.
Will Rogers said: “The difference between Death and Taxes is Death doesn't get worse every time Congress meets.”
Thomas Paine urged that everything "beyond what a man's own hands produce" was a gift that came to him simply by living in society, and hence, "he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."
Here are the facts. Data from Edward Wolff confirms that from 1983 to 2007 the percentages of net worth and financial wealth for the top 1% remained steady. But the percentages for the rest of the richest 5% increased by almost 20%, while the percentages for the lowest 80% of the population DECREASED by almost 20%.
These issues are difficult to address with Congress largely on the side of the wealthy. At the very least congress should:
(1) Eliminate the tax break on unearned income (capital gains). The richest Americans, who own most of the stocks, should not pay a smaller tax than everyone else.
(2) Implement a small financial transactions tax. It would be easy to administer on computer trades, it would generate hundreds of billions of dollars in revenue, and it would help guard against the reckless speculation that devastated the financial markets and our country.
First, I will say that any Income Tax Reform that continues to allow for Exceptions, Exemptions and Deduction will never be Fair and Equal to all. Far Too many loopholes exist through which the Top 1.0% of American Tax-Payers the “Rich and Powerful” Individuals and Corporations, Companies, Institutions and Organizations squeeze through and pay NO TAXES. Even if we made the INCOME TAX RATE on every individual who made over one million dollars to be 99%, with the use of the Exceptions, Exemptions and Deductions [that Congress would create] they would not pay any taxes.
The Entire Income Tax Code MUST be Repealed and Replaced. By the elimination of ALL the EXCEPTIONS, EXEMPTIONS, and DEDUCTIONS and by making every source of Income [Wages, Bonuses, Benefits, Interest Earnings, dividends and capital gains and any other Earnings or Gains] be subject to the same Tax Code and Rate no matter How it was earned, Where it was earned, or What it was earned from.
HERE is an Income Tax Code that is based upon Fairness and Equality, and the ability to pay, just like everything else in life. PLEASE note that the implementation of this Tax Code would significantly reduce the size of the IRS, reduce the amount of time to prepare your Taxes, and sorry to say it, but it gets rid of the need for Tax Preparation Companies.
The official numbers for people in Poverty or what is Poverty Income level don’t tell the full story. The situation of the poor is actually considerably worse than the Government reports. The official poverty line is calculated as simply three times the minimal food budget first introduced in 1959, and then adjusted for inflation in food costs. In other words, the American poverty threshold takes no account of the cost of housing or fuel or transportation or health-care costs, all of which are rising more rapidly than the cost of basic foods. So the poverty measure grossly understates the real cost of subsistence.
Existing Poverty Income Taxes:
[1.0] Income earned from $.01 to $13,537.00 for a family of one would pay Zero Tax Rate.
[2.0] Income earned from $.01 to $23,689.00 for a family of two would be Zero Tax Rate.
[3.0] Income earned from $.01 to $30,478.00 for a family of three would be Zero Tax Rate.
[4.0] Income earned from $.01 to $37,267.00 for a family of four would be Zero Tax Rate.
[5.0] Income earned from $.01 to $44,056.00 for a family of five would be Zero Tax Rate.
[6.0] Income earned from $.01 to $50,845.00 for a family of six would be Zero Tax Rate.
[7.0] Income earned from $.01 to $57,634.00 for a family of seven would be Zero Tax Rate.
[8.0] Income earned from $.01 to $64,423.00 for a family of eight would be Zero Tax rate.
For those who are not in the Poverty Income Level the Tax Rates would be as follows:
[9.0] Income earned from $13,537.00 to $100,000.00 would pay a 15.0% Tax Rate. PLUS.
[10.0] Income earned from $100,000.01 to $500,000.00 would pay 17.5% Tax Rate. PLUS.
[11.0] Income earned from $500,000.01 to $1,000,000.00 would pay 20.0%Tax Rate. PLUS.
[12.0] Income earned from $1,000,000.01 to $50,000,000.00 would pay 25.0% Tax Rate. PLUS.
[13.0] Income earned from $50,000,000.01 to $1,000,000,000.00 would pay 30.0% Tax Rate. PLUS.
[14.0] Income earned from $1,000,000,000.01 and up would pay 35.0% Tax Rate.
I would also create a Financial Transaction Fee of $ .25 on each and every Financial Transaction, to generate from $2 to $3 Trillion in Revenue to “Reduce the Deficit and to Invest in our future, our Infrastructure and our middle class.”
U.S. Corporate Income Taxes that were actually paid (the effective rate) fell to a 40 year low of 12.1 percent in fiscal year 2011, despite corporate profits rebounding to their Pre-Great Recession heights. The United States of America, both taxes its Corporations less and raises less in revenue from corporate taxes than its foreign competitors.
Therefore; under my Corporate Tax Rate Corporations would pay 15.0% Income Tax Rate with NO Exceptions, No Exemptions and the NO Deductions. Or they can pay the same Tax Rates as an Individual, seeing as the Supreme Court has ruled they have the same Right to Freedom of Speech, therefore they should have the same Right to pay the same Income Tax Rates. Corporations should not make Business decisions based upon the Income Tax Loopholes, they should be based on what is the best thing for the Corporation, Employees and the Investors. The top 500 Corporations, Companies, Institutions and Organizations within the Fortune 500, Pay No Taxes today. This Income Tax Plan would ensure that all Corporations, Companies, Institutions or for Profit Organizations that earned a Profit would PAY TAXES.
If Congress wants to provide an incentive to Corporations, Companies, Institutions or Organizations, Congress can do so by creating a Specific Tax Credit for A Specific Corporation or Company, with specified amounts and for specified time limits.
May 21, 2012 7:55pm
Theodore, you have got my vote and my undying admiration for your thoughts on this.
May 21, 2012 11:10am
"An Apple executive said: 'We don't have an obligation to solve America's problems.' "
And therein lies the crux of the problem, the crux of most problems in the world. Too many humans as individuals and as groups saying, "It's not my problem."
May 21, 2012 11:10am
I can understand that those with sound 1% credentials are avaricious, soul-less, shallow reprobates who don't even bother to mask their contempt for their neighbors and fellow citizens. What I am yet to fully understand is how their water boys like scott "Mubarack" walker or john kasich et al., continue to mount successful campaigns for political office. Who in the hell is voting for these narcissistic assholes anyway? Somebody thought, (or failed to think perhaps) that pulling the handle for scott walker was just the thing to do. How does anyone arrive at such an opinion? What level of self loathing has to be at work to reduce someone to voting for a koch-ass smooching, obsequious schlub like walker thinking it's just going to make everything so much better? Is this an indictment of our educational system? Stunning stupidity at work, just stunning.
May 21, 2012 1:10pm
Great post, RICONUI. But don't leave out Rick Snyder and Rick Scott.
You're right about the educational system. Obviously the powers that be are intentionally dumbing down America to assist them in achieving their diabolical goals. It's working. Stunning stupidity is right.
May 21, 2012 10:29am
Democrats were devastated in the 2010 elections. Obama called it shellacking. We now know that the lopsided loss was the result of a propaganda blitzkrieg paid by ultra-righties. We bought a pig in a poke: Repubs turned against the Middle Class and women with a vengeance: Thousands of bills against women's health and women's freedom nationwide. Laws limiting voting, destroying the unions, and creating a Police State rampant in many states. Mule kicks against students, but first and foremost: Tax Breaks for the Rich. None to create jobs. But no one can fool all the people all the time. The Silent Majority’s dumping ‘em to the unemployment line come Nov.
May 22, 2012 8:25am
We can't even begin to discuss restoring this country until we gain the maturity to stop believing in the sanctity of political parties. As Americans, we have all been programmed from birth to take comfort that being associated with one of many civil and government sanctioned groups is key to sustaining a fair system. But when there are efforts to regulate any of these groups that move outside established rules of behavior, government is quick to silence these efforts. A good example is the League of Women Voters who for years organized non-partisan political debates that allowed the American voter to see an unbiased presentation by all sides who seek to represent them in government. The League's efforts to carry out this activity was ended some time ago to insure that the Duopoly of the Democrat Party and the Republican Party are the only voices heard by the public. Following that, efforts to balance the election scales by promoting public funding of candidates was attempted and viciously attacked by special interests that rewarded big money by giving them sole access to the political stage. We all saw that process reach it's zenith a few years ago when a majority of the Supreme Court supported Citizens United that gave large corporations an overwhelming voice, ahead of American Citizens, in our political process. Recent polls indicate that a majority percentage of Americans are opposed to the endless wars in which we stay involved killing young Americans and foreign non combatants by the millions using Billions of taxpayer dollars that are denied to efforts to rebuild this aging infrastructure and return our economy to a place where all Americans can expect a reasonably secure standard of living and increasingly positive outcomes for the foreseeable future. Our politicians find it necessary to reorganize government to take advantage of the media generated fear of terrorism by co-opting our Constitution and laws and create a police state environment like the one we recently saw at the NATO Meeting in Chicago and earlier events such as the various political party nominating conventions in 2004 and 2008 and the WTO meeting in Seattle over a decade ago. Too many Americans have for too long stayed complacent concerning the condition of this nation state and the most likely outcome will become apparent to every citizen when we find our selves in the same position as the German People in the 1930s who ignored the rapid intrusion of Fascism until they had no voice !
May 21, 2012 1:11pm
I hope you are right, Mike.
"The Silent Majority’s dumping ‘em to the unemployment line come Nov."