New Study on Corporate Tax Thieves. What We Going to Do 'Bout It

By Richard Mellor

Afscme Local 444, retired

The Institute on Taxation and Economic Policy (ITEP) has just published a new report on corporate taxes. The report will not receive much attention in the mass media other than being discredited by those whose interests are harmed by it.  The report explodes the myth that US capitalism is not competitive due to the 35% tax rate as the actual rate is much less (21.2 % on average) due to loopholes and that many major US corporations paid no federal income tax at all over the last 7 years.

US capitalism is forced to drive US workers and the middle class back to conditions that existed before the rise of the CIO in the 1930’s and the Civil Rights movement that followed, a process Facts For Working People has referred to as not being able to afford “guns and butter”. The poor, the disabled, those capitalism has abandoned, must join them and sink even lower. Those limited regulatory protections aimed at softening the most savage consequences of the so-called free market are to be dismantled under the neo Nazi Steve Bannon’s “Dismantling of the Administrative State”

The ruling class knows that resistance to this capitalist offensive against us is inevitable and when the working class moves in to struggle we are forced by objective events to fight back. In this process, there is a strong tendency toward class unity; an innate desire to seek allies in this class war, which means a conscious effort to overcome the divisive strategy of our enemies. Gender, race, skin color, religious sectarianism, national division, regional competition, union vs non union all has to be overcome if we are to stop the offensive. This process does not proceed in a straight line; there are conflicting currents, periods of confusion, times when the divide and rule tactics of the 1% are stronger and times when working class unity drives it back. Leadership, and the lack of it, plays a powerful role in determining the outcome of this process. For socialists and those of us that see we have to change the economic system in which we live, we are engaged in a struggle for the consciousness of the working class.

Studies like these are not useful to the ruling class which is why their media constructs a whole host of straw men designed to divert our attention from them, from us drawing conclusions about the system in which we live. Communism, as Stalinism is referred to in the capitalist media, has failed, so the new enemies of freedom and “American Exceptionalism” have emerged. Marauding Muslims and their Sharia Law, immigrants, heathens, unions and the LGBTQ communities are a threat to our freedoms. At all times, people of color as the ruling class has white skin in the main, so they will make appeals, as they are now for the unity of the “white race”. With God’s grace, the African Bees, once threatening to invade our shores were blown off course.

The ITEP report includes only 258 corporations that were profitable every year from 2007 to 2015 and found that:

As a group, the 258 corporations paid an effective federal income tax rate of 21.2 percent over the eight-year period, slightly over half the statutory 35 percent tax rate.

Eighteen of the corporations, including General Electric, International Paper, Priceline.com and PG&E, paid no federal income tax at all over the eight-year period. A fifth of the corporations (48) paid an effective tax rate of less than 10 percent over that period.

Of those corporations in our sample with significant offshore profits, more than half paid higher corporate tax rates to foreign governments where they operate than they paid in the United States on their U.S. profits.

These findings refute the prevailing view inside the Beltway that America’s corporate income tax is more burdensome than the corporate income taxes levied by other countries, and that this purported (but false) excess burden somehow makes the U.S. “uncompetitive.”

Other Findings:

One hundred of the 258 companies (39 percent of them) paid zero or less in federal income taxes in at least one year from 2008 to 2015.

The report also states that: Five companies AT&T, Wells Fargo, J.P. Morgan Chase, Verizon, and IBM — enjoyed more than $130 billion in tax breaks during the eight-year period.

Let’s digest that. They paid no taxes and received tax breaks.

As I say, the mainstream (bourgeois) media will discredit and undermine these statistics. Their politicians in both parties will attack the study or if they support it, they will only do so as a partisan tactic to make political gains over their opponents. In other words, one section of the capitalist class will use the study in their struggle with another section over who gets to plunder the wealth of society through the next electoral cycle.

The ITEP does make suggests for covering up loopholes like making new laws.  This cannot work as the same body of people they are appealing to made the present laws. The response from corporations in these instances are the same when investors, hedge funs, other parasitic elements are caught cheating and they claim, “They acted within the law”  When one writes the law, how can one not act within it?

Reporting on the study, Bloomberg BusinessWeek points this out: “Note the word “legal” in “legal tax avoidance.” These companies obeyed the law, as far as anyone knows. If you have a problem with their actions, blame Congress, not the companies and their highly skilled tax attorneys and accountants.”

There have been many tax reform acts and nothing ever changes. We have a state that is a capitalist state and the capitalist class has two parties that have a monopoly over political life. We live in a “dictatorship of capital” I commented on this some time back. See Facts For Working People: Not Another Tax Reform Act

Neither one of the two capitalist parties will write tax law that benefits workers.  We oppose any taxes on workers or the middle class and any politician or political party claiming to represent the interests of working people should make that pledge. But workers have no political voice; we have no political party of our own based on our organizations and our communities. As we have explained before on this blog, this must arise out of a mass direct action movement that will undoubtedly develop and is developing as a result of the aggressive agenda of the degenerate Trump and his administration.

I drove down to Southern California last week. One has to travel through the vast productive area we know and the Central Valley. There is much poverty and pollution there, an area in a state that is the 6^th largest economy in the world. It is an artificial agricultural area in a way as the water is imported, so is the labor power and the soil not naturally suitable for agriculture. In short, it was a desert. Water is gold in California’s agricultural heartland and one of the largest aquifers if not the largest is owned by billionaire real estate developer Stuart Resnick who also owns an 188 sq. mile farm in California and produces pistachios among other things.

Capitalists like Resnick and those that own these tax-dodging corporations don’t produce for the needs of society, that’s incidental; they produce for profit. One grower that delivers his produce to Resnick’s processing plant is ecstatic:

“The sound of money is when a harvester goes next to a tree in an orchard with 7000 pounds of pistachios and shakes it. That sound, when the pistachios hit the catch frame, that’s the sound of money.”

“It’s like a Vegas slot machine,” an executive replies. Read more here.

This conversation takes place in one of the poorest counties in California, a county where the police shoot more people than anywhere else in the US.

Along I 5 you see political signs calling for more dams and less trains. One said, “Is it a waste of water to grow food?”

It is not a waste of water to grow food. The question is who owns the means of growing the food and what sort of food is being grown, this must be a collective decision within a rational plan as must all decisions about the resources of society.  The capitalist class will not “voluntarily” step down. The owners of the dominant sectors of the economy will not relinquish their grip on these important means of production or stop plundering the wealth of society for personal gain. These corporations must be taken in to public ownership under the democratic control and management of workers as producers and works as consumers.