US corporations paying taxes as small businesses

I went up to the Sacramento yesterday for the first day of what is planned to be a week of rallies and occupations to protest the attacks on public services and education. There was a rally and press conference held by the California Teachers Association, the Union and NEA affiliate that represents some 300,000 teachers in the state. I didn’t get a chance to hear all the speakers but those I heard gave a push for governor Jerry Brown’s budget proposals that include extending tax increases that have expired or are about to expire.

Brown, the Democratic Party and trade Union leaders in the state all paint a horrific scene if the voters don’t vote to cut our own throats. We are expected to increase taxes that will cut further in to our disposable income. The consequences of workers failing to bear our share of the sacrifice will be devastating. Without the tax increases, John Perez, California’s Assembly speaker told us a while ago, the cuts would amount to the full $25 billion instead of the governor's "balanced" proposal of $12.5 billion.  Brown told the San Francisco Chronicle he won't reveal what will happen without the tax increases because, "It's so horrible".  A Brown spokesperson says that the cuts would be made in "public and higher education, public safety and health and social services". This is coercion, and a form of economic terrorism.  it isn't freedom by any stretch of the imagination.

We have numerous examples on this blog of other revenue sources, including Bernie Sanders’ top ten, but a political party is not an abstract thing, it represents forces in society; class interests. Both Democrats and Republicans will do their job which is to ensure that the crisis of their system is laid squarely at the feet of workers and the middle class and that the interests of capital are not threatened. Democrats and Republicans differ only on the details but are in full agreement that the working class will pay and the heads of organized labor go along with this.

It’s criminal really that Union officials at the highest levels are praising Jerry Brown and Barack Obama’s vicious assault on working people given the money that exists in society, often referring to the assault as “fair and balanced”. In the 1950's corporate taxes were 4.7% of US GDP and 30% of federal revenue. But from 2000 to 2009 the figures are 1.9% and 11% respectively.

We have blogged previously about the capitalists' efforts to change their tax code. They want to reduce the corporate tax rate from 35% to the “upper 20’s” in order to put more money in their own pockets but they can’t reduce overall revenue. One area of concern, even to some of their political representatives is the issue “Pass Through’s” What are “Pass Throughs” the average person might ask? It sounds like information we might find on a pamphlet on local bus routes but Pass Through’s are “big businesses that are currently taxed as small ones” the Wall Street Journal writes. They are corporations that the law allows to pay tax through their owners' personal returns.

The law allows (and who writes, introduces and passes legislation?)) for an increasing number of corporations to avoid corporate taxes as a “pass through”. They are allowed “to pay tax through their owners’ personal tax returns.” the Wall Street Journal writes admitting that it is a “way of avoiding corporate-level tax.”

Naturally, with such a gift as this, multi-billion dollar corporations are accepting it with gratitude. “Pass throughs” have “exploded in the US over the last 30 years” the WSJ adds pointing out that they presently account for “half of business net income and employ more than half of private sector workers.”.

Among these “big businesses” that are paying tax as small business is Kohlberg Kravis Roberts Co. the global private equity firm. Older Safeway workers will know that name as it was the firm that bought Safeway for some $5 billion 25 years go slashing wages and eliminating jobs. Henry Kravis, one of its founders is worth some $5 billion and a big supporter of George W Bush. Another corporation paying small business tax is Price Waterhouse co. PW has offices in 757 cities in154 countries and employs over 161,000 people. It had total revenues of $26.6 billion in 2010.  Quite a successful small business I would say.

The capitalist media always talks about the “rule of law” and that we are a society of laws. The legislatures that makes the laws of society are populated by representatives of these corporations. The US Congress is an institution full of millionaires and billionaires in political parties that represent the interests of these people and this class in all aspects of life.

The building of a mass workers political party, an alternative to the two parties of capital, is a crucial first step along the road to controlling the resources and wealth in society that our Labor creates. And many genuine small businesses like the coffee house I am sitting in at the moment can be drawn to a mass party of the working class, would become an ally of Labor as we fought for their interests and helped free them from the clutches of the global corporations, the insurance and health giants. It is the small proprietor, the deli, the coffee shop, the family plumbing business or the barber shop that might hire one or two workers that workers think of as small business, not the silicone valley startup employing 300 people and funded by Warren Buffet’s holding company. The small business we refer to are very much a part of and integrated in to our communities.

Look at the resources that have been disbursed, to the bankers, speculators and other financial charlatans by their political representatives. These resources are ours and we have no say in their allocation; they give our money away as they attack already insufficient wages, benefits and public services. The genuine small business, the classical “middle class” are sandwiched between two great classes, the capitalists and workers and they can be swayed either way, to the left or the right. Imagine the cheap credit that could be offered to small business by a workers' party in power that took the banks in to public ownership.

The US capitalists are putting us on rations. The Union leaders are going along with it in a desperate hope that things will get better but that is ruled out. We cannot avoid a fight; we cannot do nothing and expect it to go away. But we have the numbers and our role in the productive process gives us the power to turn the tide.