Taxes @ MindSay

It slightly irks me when injustice rules.  Whether it's on the playground at the school where I work, in the offices of teacher's at the college, in the realm of my friends and family, pretty much anywhere!  But when injustice enters Washington, a place where Justice for this country was practically born and where it is supposed to be growing and flourishing, well my fellow American's, I'm a little be p/o'd.

 

I don't care what party you're with or what you believe, I thought that "telling" on someone was the tactic's of the sandbox.  It makes me angry to watch a presidential debate and hear what sounds like a bickering siblings' dispute: "Well... he did this!  I told him not too; I didn't think it was a good idea!"  "Nuhuh!  You're just being a poophead!"  I mean, if we break those talks down like a fraction, that's the heart and soul of 70% to 80% of these "debates" as they call them. 

 

What happened to the facts?!  Forget why the other is WRONG for the office; tell me why you're GOOD for the office!  I don't want to hear you practically biotch slapping your opponent.  Quit referencing to the past; show me where you're taking us in the future!  This bull about playing up your crowd by demeaning to opposite is just ridiculous.  I could pick second graders that were better equiped to handle an intelligent discussion than these educated, capable, RICH people who want to run our country.

 

In a presidential debate I want to hear what's going to happen to: The economy, Energy Crisis, Taxes, Gas Prices, Abortion and Heterosexual Marriage, The War, Corrupted Government, Illegal Immigration, and Homeland Security.  These are the facts.  These are the bare minerals of what this Country needs in a Leader.  A Leader.  Not a tattle-tale or a backbiter.  Come on!  Let's be adults about this.  If I'm barely old enough to vote and I still see this as childish: I believe this paradigm needs to be thought over...

scroll down and see the looks on the happy faces(and their kids)..
relationships that mean something to those involved..

Hear Here!

Well I have kept quite on Mindsay about how I feel about the economic bail out.  And after getting a little more information, talking to a few people (including accountants and one friend that works for the IRS), and then hearing that the House defeated the bail out bill; I felt it was time to open my mouth.

 

I say good for the House of Reps for defeating the dayum thing!  If you didn't know the buy out wouldn't have saved anyone?  Including us peons of the middle and poor classes?  If anything it would have harmed those of us that pay more taxes in then the rich ppl!

 

If you think I am shitting, you should have talked to your accountant and made a few phone calls to the IRS.  If the bail out would have gone through, come Febuary when the next installment of the bail out was destined to happen, those of us who pay in to taxes and get tax returns would have been ass out!  The big wigs and the politicians that wrote the bail out contract had it in their bill that if it came to pass, they would have taken everyone's tax return at next tax time. 

 

Now normally I am not a big Michael Moore fan, but Mr. Moore with the help of MIT Financial Students, came up with a different plan for the same amount of money of the first bail out.  That plan would have given each US Citizen 15-20 million dollars apeice.  Not couples but apeice.  Basically giving us back our own money.  Do you know what all of us could have done with that money?  We could have stabilized the economy!  Those banks who are sitting on bad loans, could have been paid off by those that are paying on the bad loans.  The housing market would have boomed!  Morgateges would have been paid off, those of us that rent would have been able to go out and buy a house.  The car industry would have increased because of everyone going out and buying new vechiles.  The Retail industry would have increased with ppl doing home maintanice, buying items they have been needing but couldn't afford, and the travel industry would have boomed also!  Not to mention we would have helped to bail out the financal institutions by investing our money.  Back bills would have been paid off, increasing business investments of companies that would have seen a windfall of money coming at them! 

 

Instead of helping these super rich coroprate men, they should look into helping the American People.  And I have said it before and I'll say it again; I know right were we can get soem extra cash and clean up a budget or two!  Take the dayum outragous income that still living Presidents and their wives get and cut it in 3/4 of what it is!  They have done their job they shouldn't be getting that much money after the fact they did their job in office.  The wives shouldn't get shit!  They didn't do anything for our gov't.  OOOOOOO they were ambassadors what ever.  They weren't on the pay roll they don't get retirement!  Same with the preisdential widows!  Their ol men made a butt load of money.  If they didn't invest it properally not the tax payers problems! 

 

Okay that little rant is over with.:d  So I finally put my two cents in on the bail out.  I think we the people should get the money to pay off our back bills, our morgatages, and go out and help the economy instead of giving it to the banks that screwed up and gave out bad loans! 

When you redistribute wealth by raising taxes on the wealthy you accomplish two things, one of which works simply because you have raised taxes:

(a) More money in the pockets of the public means more consumption, which leads to more surplus production realized as profit, this leads to more production of surplus value, more jobs, more income, more consumption, and so on.

Allow income to be bottled up at the top and you retard economic growth. What capitalists perceive is good for them personally is actual bad for the capitalist economy. Self-interest behavior at the firm level leads to weak economic development at the system level. This is why capitalism needs state intervention.

(b) More taxes mean smaller budget deficits. Smaller budget deficits mean lower interest rates. Lower interest rates mean more borrowing and investing. More borrowing and investing means expanded economic activity and more jobs. This dovetails with (a) to grow the economy.

Every time this strategy is used it works. Every time taxes are cut for the wealthy and on capital the economy slows or contracts. This is why as a general empirical reality Democrats preside over better economic times than Republicans.

Republicans are good for a narrow range of capitalist interests - energy, for example - but Democrats are good for the overall capitalist system.

America does much better under Democrats than Republicans. It's a material fact. All you have to do is examine economic patterns over the past 50 years.

What I would do is raise top marginal rates to over 90 percent, raise corporate taxes and capitalist gains taxes, and implace an exit tax on corporations leaving the country. I would then reduce taxes on 90 percent of the population, eliminating taxes on everybody earned 60 thousand dollars or less and implace a negative tax on everybody earning 300 percent of poverty. I would start public infrastructure projects, especially environmental clean up, sufficient to soak up all surplus workers.

The economy would boom.

A final note to readers: Before you post, be sure to read through the post and consider your thoughts before leaving a comment. I will erase any irrelevant comments mercilessly. If I don't reply to a comment, but leave it posted, it's probably for a reason.

August 20, 2008

Do Corporations Really Pay No Taxes?

By Steven Malanga

By most accounts, 2005 was a good year for the U.S. economy. The nation added more than 2 million jobs and the unemployment rate averaged less than 5 percent. Gross Domestic Product grew robustly, and corporate profits soared nearly 18 percent. But few people, including many in the media who regularly report on the economy, understand what happened below the surface to produce those surprisingly good results. Consider, for instance, job growth.

American businesses actually produced 31 million new jobs in 2005, driven by on average some 1.5 million firms every quarter that were expanding, and another 370,000 new businesses that were starting up. On the other hand, firms also eliminated nearly 29 million jobs, including an average of nearly 1.5 million businesses that were contracting each quarter and another 325,000 going out of business, according to the Bureau of Labor Statistics’ Business Employment Dynamics survey. The net result, 2 million additional jobs, is the product of the enormous creation and destruction going on below the surface.

Those startling numbers should remind us that even in a strong economy there are plenty of losers—not just winners. And that should help explain what’s wrong with the press’s coverage of a Government Accountability Office study released last week, which reported that two-thirds of American corporations paid no taxes in 2005—including a quarter of big businesses. The report, commissioned by several labor-friendly Democratic Senators who pretty much knew based on previous studies what it would say, sparked a lot of manufactured outrage in political circles and produced a series of misleading stories, like one by the Associated Press that ran in dozens of newspapers under sensationalistic headlines like “Corporations Pay No Taxes.”

A number of more rational commentators have pointed out some of the ways that the pols have led the media astray on this one. Kevin Hassett, in a Bloomberg commentary, explained that most small businesses are now organized in such a way that many prefer to take their profits as an owner’s salary and pay taxes on the wages. It’s not that they aren’t paying taxes, as the headline incorrectly says, but rather that the money is not flowing to the government through the corporate levy.

Still, the report leaves open the question of larger businesses that paid nothing. The impression one gets from corporate critics is that many are prospering but exploiting loopholes in the tax code and leaving the rest of us to pick up the tab. But that criticism is based on the mistaken notion that in robust years, such as 2005, virtually all businesses do well. Nothing could be further from the truth.

Even in good times, there are plenty of losers in a dynamic economy. The BLS’ Business Dynamics Survey, for instance, shows that in 2005 there were 7.3 businesses that were contracting for every 7.6 that were expanding, including 1.3 that were closing their doors for every 1.5 that were starting up. Large businesses were hardly immune to this kind of tumult. For every 5.8 jobs added by firms with more than 500 employees, other firms that big eliminated 4.9 jobs. Among those hit hard in 2005 was General Motors, which despite $193 billion in revenues wracked up a $10.4 billion loss and cut its workforce.

It shouldn’t be necessary to remind reporters and editors who cover such matters that businesses pay taxes on their profits, not sales. But I often read stories in which a reporter confuses the two, saying that a business “made” $50 million when the writer is referring to the company’s sales. Much of the press that the GAO report received revolves around blurring the distinction between these two. As Michigan Senator Carl Levin, a frequent critic of corporations, said of the study, “Twenty-five percent of the largest U.S. corporations [those with more than $50 million in revenues] had $1.1 trillion in gross sales in 2005 and yet paid no federal income taxes.” That statement suggests that Levin is either trying to mislead us or that he has made it into the world’s most exclusive club, the U.S. Senate, without knowing the difference between earnings and sales.

The difference, of course, can be enormous. For one thing, many industries have extremely small profit margins because as soon as it gets too easy to make a buck in a free-market system, you’re sure to get plenty of competitors crowding in, driving down your margins. The average net margin in the supermarket business is just 1 to 2 percent of sales, for instance, which means that a company with $50 million in sales (to use the study’s definition of large businesses) would earn, on average just $500,000-to-$1 million annually and pay taxes on that money. Many firms in the industry, of course, would be below that average, and some would lose money in any year.

Many businesses we regard as successful operate on small profit margins. After paying $5.8 billion in taxes in 2005, Wal-Mart earned $11.7 billion—a nice chunk of change. But those earnings were on revenues of $312 billion, a mere 3.4 percent net profit margin. Exxon Mobil earned $36 billion in 2005 after paying $23.3 billion in taxes on revenues of $371 billion. Looking at that result you realize that in America today, a ‘windfall’ profit is one that amounts to less than 10 percent of revenues.

The politics behind the GAO report are transparent—to undermine the momentum that’s building to cut corporate tax rates. As I wrote several weeks ago (“In the U.S., Selectively Applied Capitalism,” July 28), the U.S. has the second highest corporate tax rate among 30 countries in the Organisation of Economic Co-Operation and Development. That matters because, as economists for the OECD recently concluded, the corporate tax is the most harmful to economic growth of all the levies most commonly used by member nations. That’s why GOP presidential nominee John McCain favors lowering it, but so does the powerful Democratic Chairmen of the House Ways & Means Committee, Charlie Rangel. The Democratic presidential nominee, Barack Obama, has also said in newspaper interviews that he would consider cutting the corporate tax, but he hasn’t made that an official part of his platform.

Now, however, labor-friendly legislators egged on by union leaders are trying to derail calls for a corporate tax cut by manufacturing outrage against U.S. businesses. That’s not hard to do when you have so many journalists reporting and commenting on these issues who can’t get behind headlines that are spoon fed to them, like the editorial writer at Newsday who found the GAO report “jaw dropping.”

Yes, it’s true that 2005 was a good year for many American companies. As I noted above, corporate profits rose 18 percent, according to the Bureau of Economic Analysis. But taxes on corporate profits that year increased 34 percent, says the BEA. Growing firms, you see, do pay more in taxes. Just don’t imagine that every business is growing whenever the American economy is.