Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Meanwhile, UK Corporations Dodge TaxA series from the Guardian, with an ever-stimulating (though I think he borders on the delusional when he talks about MoveOn.com) column from George Monbiot. Particularly interesting is the use of the designation "intellectual property," that obnoxious term celebrated by all manner of conventional economists, as a cover for slush funds. You can bet similar dodges are employed by US firms, too.Here's a link to the series. And to Monbiot's column. Labels: bailout, corporate taxes, financia crisis, George Monbiot, tax dodges, Tax law, United Kingdom Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). AIG Keeps SinkingAIG executives, back from their spa retreat and British hunting trips, are busily back at work throwing tax dollars into the furnace.In little over a month, the company has accessed $90.3 billion (nearly three-quarters) of the $122.8 billion in credit lines extended by the Fed in exchange for an 80% stake in the company. AIG chief Edward Liddy said that the company may soon have to ask for more money if the company is forced to post more collateral for bond holdings that it guaranteed but that are now being downgraded. Under extreme pressure from NY Attorney General Andrew Cuomo, AIG has agreed to put a hold on paying out performance bonuses to former and current executives. The impact of the AIG collapse is being felt far and wide. Thirty municipal transit agencies, including those in Atlanta, Chicago, DC, San Francisco, and Los Angeles, are facing the prospect of being forced to come up with hundreds of millions of dollars. The crisis is a result of complicated (but legal) tax dodges between the transit agencies and private banks (explained here in the Washington Post). Basically, the banks paid the agencies large sums upfront that would be repaid in installments over time. Exploiting a loophole in the tax code, the banks saved hundreds of millions in taxes, but split the profit with the transit agencies. The deals were guaranteed by AIG, but now that the insurer is on the skids and the federal government has declared an end to the tax dodge, the banks are demanding that cash-strapped transit agencies hand over hundreds of millions in cash in the next few weeks. The demands may actually be a bargaining tactic to force Congress to extend the tax breaks. Labels: AIG, corporate taxes, economic meltdown, public transit, tax dodges Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). John Miller on the RadioEconomist and Dollars & Sense columnist John Miller is on the radio--on the program Justice or Just Us? on KUCI in Irvine, Calif. He's talking about the recent GAO report showing that many corporations pay no taxes at all in the United States.John's latest Up Against the Wall Street Journal column, just posted to the D&S website, is on cap-and-trade programs: "For the Wall Street Journal's editors, fear of a bigger government outweighs the fear of a warmer planet." Labels: cap-and-trade, corporate taxes, GAO, John Miller, Wall Street Journal Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Psst! Corporations Don't Pay Taxes! This tidbit appears in "The Short Run" column of the January/February issue of Dollars & Sense. Thanks to Barry Deutch for the 'toon, and to D&S stalwart Phineas Baxandall for the tip. An obscure state law allows any Wisconsin resident to find out the taxes paid (or owed) by any taxpayer—including any corporation. You just have to fill out a simple form, which is exactly what researchers from the Institute for Wisconsin’s Future (IWF) did to find out about taxes paid by dozens of corporations doing business in Wisconsin. What they found: among corporations with more than $100 million in revenue, more than 60% paid no state income tax. These included non-Wisconsin companies like Kraft Foods, McDonald’s, Microsoft, and PepsiCo, and Wisconsin-based companies like Johnson Controls, Manpower, Kohl’s, Harley-Davidson, and Rockwell Automation. They also found that of the total tax revenue in the state, only 3% came from corporations; in contrast 36% came from property taxes, 29% from sales taxes, and 26% from individual income taxes. Information about corporate tax payments is notoriously difficult to obtain, though it’s supposed to be public. Even Wisconsin’s relatively progressive law has some bizarre restrictions. “No person may divulge or circulate” the information obtained through the law, with two exceptions: publication by a newspaper or disclosure by a public speaker. So IWF couldn’t send out a press release, since this would have involved “divulging or circulating” the information. Instead the group had to hold a press conference, invite newspaper reporters, and give out the scandalous figures orally. Only when the story had circulated in the media could IWF even post the findings on its own website. The state’s largest business group, Wisconsin Manufacturers and Commerce, tried to discredit the report, claiming that IWF is “a very left-leaning institute that’s heavily funded by labor and public employee unions.” Meanwhile, an affiliate of the group, Forward Wisconsin, which tries to lure businesses to the state, boasts on its website about Wisconsin’s business-friendly tax policies and cites tax rates that are even lower than what IWF alleges. Seems like low corporate tax payments aren’t so much of a secret after all, depending on your audience. Labels: corporate taxes, IWF, Wisconsin Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Representative Mica (R-Fla) Distorts on Corporate TaxesRepresentative Mica Distorts on Corporate TaxesThis issue's Dr. Dollar answers a question from Sandra Holt, a constituent of Congressman John Mica, who represents the 7th congressional district in Florida. A visit to Mica's official U.S. House of Representatives website confirms Sandra's suspicion that her member of congress is engaged in double talk on corporate taxation. On a page entitled "Protecting Jobs and the Economy," Mica says that he supports: "... efforts to spur business activity and keep more jobs here at home by reducing the corporate income tax. The United States has one of the highest corporate income tax rates, especially when compared to many of our primary economic competitors, such as Britain, France and Germany. Higher taxes on the returns to corporate capital inhibit the competitiveness of U.S.-based companies in foreign markets. With such a high tax burden to bear, many corporations are unfortunately attempting to cut costs by relocating abroad and taking good-paying jobs with them. Instead of punishing businesses for attempting to make a profit, I believe we need to reduce their incentive to sacrifice American jobs by lowering corporate income taxes." [Emphasis added.]But as Ramaa Vasudevan shows in her Dr. Dollar column, corporate taxes in the United States are not high compared to other developed countries: "Is the U.S. corporate tax burden higher that that of its competitors? Comparisons of 29 developed countries reveal that only three—Iceland, Germany, and Poland— collected less corporate income tax as a share of GDP than the United States. This represents a reversal from the 1960s, when corporate income tax as a share of GDP in the United States was nearly double that of other developed countries."Nor are corporate taxes burdensome: In 2002-03, U.S. corporations paid an effective tax rate of only about 23%. Forty-six large corporations, including Pfizer, Boeing, and AT&T, actually received tax rebates (negative taxes)! Far from being a crushing burden, corporate income tax in the United States has fallen from an average of nearly 5% of GDP in the fifties to 2% in the nineties and about 1.5% (projected) in 2005-2009.We submitted the following to the comment section on Mica's website: Dear Representative Mica, We eagerly await a response from the congressman. Labels: "double taxation", corporate taxes, dividend tax, John Mica Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
