The cover story in this weeks Business Week is about the tax code that they are re-writing yet again. It also details all the schemes the rich and corporations have for avoiding taxes. We have to watch our backs when the capitalist class talks about "reform". As an earlier blog explained, every time they "reform" the tax code, the army of paid bribers that they call lobbyists bribe politicians to write laws that favor the rich and the corporations. The same propaganda about taxes is in the air this time around, lower the tax rates for everyone so that the capitalists will invest and create jobs for us; they're such humanitarians.
The US federal corporate tax rate is 35% and the US capitalist class is always complaining that it is the highest in the developed world. A corporate tax rate, which is in a way a form of regulating profits, is like any other regulation that capitalists write, written in a way that offers a way around them. We call them loopholes.
Global Internet retailers, unlike what is referred to as "brick and mortar" companies that have a huge percentage of their assets in land and buildings, can simply move to other countries where the tax rates are lower or non existent. The logical response to this is the taking in to public ownership under workers control and management of the dominant sectors of the economy, including the financial sector that controls the flow and allocation of capital. Amazon's international tax rates for the past three years has averaged 4.2% according to the firm's own annual report.
Through a dictatorship of US political life with their two political party's, the Democrats and Republicans, the bosses have managed to reduce corporate taxes over time. In the 1950's corporate taxes were 4.7% of US GDP and just 1.9% from 2000 to 2009 amounting to 11% of federal revenue over that period compared to 30% in the 1950's. The same figures for US multinationals in other countries is even less, if they pay any tax at all. The bosses park cash in all sorts of havens to avoid taxes, Bermuda is one. Bermuda had a GDP of $5.4 billion in 2006 but was home to $51 billion of untaxed profits, there are similar ratios for other low tax countries like Ireland.
The Cayman Islands have a zero tax rate and had a GDP of $2.3 billion in 2003 but was home to $28 billion in untaxed profits. Ugland House in the Caymans, "is the registered address for 18,957 companies" Business week points out. The bourgeois as a whole get somewhat annoyed at this as not all of them can shift assets overseas and hide them as easily. It's not that they oppose robbing from the working class, they don't like that they might be losing more of their looted cash to taxes than their colleagues. The same intra class conflict exists between the old style bourgeois operating within the exchanges where there is a certain amount of transparency and the financial wasters, Hedge Fund managers and the private equity kings who make money outside them and are taxed at a lower rate.
"For the 400 US taxpayers with the highest adjusted gross income, the effective federal income tax rate--what they actually p[ay---fell from almost 30% in 1995 to just under 17% in 2007." Business week adds. The more these thugs earn the less they contribute. We live in a society where those that do productive Labor pay more than those that do none. Their wealth comes from the profit of capital, form dividends and capital gains, speculation and just basic coupon clipping. And capital has it's source in the unpaid Labor of the working class, appropriated through the Labor process. So the capital we are talking of here is collective property of the international working class.
As workers' living standards and public services are being savaged and youth, especially black youth, are being incarcerated at alarming rates, the rich are raking in the dough as we have shown on this blog many times. Business Week gives another example of how the laws they write help them. From 2003 to 2008 real estate developer Frank H McCourt Jr. who also owns the LA Dodgers, "paid no federal, state or regular income taxes.". The LA Times had a story about this and McCourt's defense was that he "availed himself" of a provision in the tax code that permitted sports franchises to defer taxes. Not that I have many friends who are sports franchise owners but who wrote that provision?
This is what their bribers do in Washington and the state legislatures; they bribe their representatives in one or other of their two parties and they take care of them by writing such provisions in to the tax codes. "For those who can afford a shrewd accountant or attorney, our era is rife with opportunity to avoid or at least defer bills" says tax experts.
The significance of the US working class having no mass party of our own and the bosses having two cannot be underestimated as these figures show. A political party does not exist in a vacuum and the bosses have the market cornered. Each election cycle it is not necessary for them to consider what they should do if the workers all vote for "their guys". An independent mass workers' party changes the balance of class forces.
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