Ire at corporate tax breaks misdirected!

Tax the hell out of them? Be careful of what you ask for!

By Jack E. Lohman

Indeed corporations are favored more than they should be, but that’s because our esteemed politicians get a piece of the profits before they are offshored. Yea, through overly-compensated CEOs and executives, but that’s the way today’s game is played. (Union members get theirs too, through a different money flow. Both games must be stopped.)

We tax corporations because it appeases the voters, but we all pay these costs when we buy product at the cash register. Added to the cost is an unnecessary expense to offset the costs for CPAs and attorneys for legal tax avoidance.

Having spent 25 years as a business owner — before I got old and retired — let me assure you that 100% of the taxes I paid were passed on to the consumer. I had to, or I would have gone belly up and my employees would have been out of work.

Thus corporate taxes should be ZERO!

Because too, they encourage companies (along with high labor costs) to take their jobs offshore, and even incorporate in other countries. As I said last week, “We have given them a choice: either bring your profits home so they can be taxed, or invest them overseas where they are not taxed.”

We know the decision they made. That makes zero sense, and we can do better.

No, corporations should not get a free ride. Those who stay in the US and employ US workers should have a competitive advantage on state and federal government bids. If there are three or more US corporations qualified to bid, no foreign corporations are allowed to bid unless they are at least 30% less costly than the lowest of domestic bids. (This of course needs fine-tuning by Elizabeth Warren to block the funny games CEOs play.)

And NO company should receive a tax break or subsidy if they are not incorporated in the US, pay taxes in the US, or otherwise outsource their jobs. Outsourcing is currently subsidized by our nice politicians, and India loves them for that, and so do the politicians that are on the take.

So how do we make it up?

With a more progressive personal tax that includes a 50% tax on all income (wages and benefits and bonuses) over $5 million per year. And if a corporation chooses to compensate its executives through funny games on the outside, such compensation is still taxed.

Will the Fat Cats then leave the state? Not if the corporations are penalized by the amount their top 5 employees would otherwise have had to pay. We CAN find a way to prevent loopholes, and we must. But we need honest politicians to do so..

It indeed irks me to see GE pay zero taxes while at the same time paying their CEO Jeffrey Immelt $15 million per year, and worse, President Obama hiring him as his expert on corporations. I’d rather have Qaddafi, but he makes no campaign contributions.

How about the VAT or sales taxes?

Well, they are all “regressive,” meaning that they affect lower-wage people more than the wealthy. So are tariffs.

But tariffs scheduled for, say, 2013, will encourage and give corporations time to bring their jobs back to the US. And if they don’t they’ll have higher priced products and the tariffs will help offset our costs for the unemployment they helped cause. And above all, if another country has 20% tariffs on imports from the US, then the US must apply a 20% tariff to their products. NOW!

Unfortunately, all of this highlights the main problem: our corrupt political system. Politicians are PAID to spend money and reduce taxes for businesses and the wealthy, and THAT is what we must fix. We need public funding of campaigns, and then the politicians will make good economic decisions that benefit the taxpayers and not their pocketbooks. And if we don’t get that this year, we must throw them all out in 2012.

8 Responses to Ire at corporate tax breaks misdirected!

  1. Gregg says:

    I’m a little confused…

    In the section ‘Thus corporate taxes should be zero’ you say, “those who stay in the US and pay taxes should have a competitive advantage on state and federal government bids.” I thought you said they should not pay taxes.

    You also say corporations should not get a free ride and should have a competitive advantage on state and federal contracts. If they don’t pay taxes and they get preference on government bids, that sure seems like a free ride to me.

    So I’m not sure if you are saying ‘they should not pay corporate taxes’ or ‘if they pay corporate taxes they should get preference on bids’ or both.

    Thanks again for writing these articles.

    • You are correct, Gregg. If they pay taxes (under today’s scenario) or employ US workers under the proposal. I have made that change above.

      And yes, an advantage if they employ US workers, but a penalty if they don’t. Taxes are one thing. who they employ is something else.

      But be sure of this: NOTHING is currently fair if it penalizes the companies that bribe politicians, and that must change.

  2. Eugene Barufkin says:

    Jack,
    In to many cases, corporations went out of business leaving a mess behind for Government to cleanup.
    The PCB issue is big. GE is paying, as ordered by courts, to clean up their messes in the Hudson River & in WI. As is a few paper mill corps still in business. But for the most part the toxic dumps,rivers & streams are being cleaned with ‘tax money’.
    Messes caused decades ago by rug & cloth mills and chemical cos long gone, only tax money is available for the cleanup.
    In the J-S recently, a mixed bag cleanup money-
    PCBs cleanup cuts fish toxins | Pollutant in walleye plunges 73% in Fox River segment Article | Posted: March 31, 2011 By Lee Bergquist
    A new study shows that walleye living in a portion of the Fox River contained sharply lower levels of a toxic pollutant after the first phase of work to remove tainted sediments from the river. The Department of Natural Resources said Thursday that levels of polychlorinated biphenyls were down 73% in walleye in 2010 in Little Lake Butte des Morts.
    Many more examples –
    http://www.jsonline.com/business/118958584.html
    http://www.jsonline.com/blogs/news/69383087.html
    http://www.jsonline.com/news/wisconsin/50177287.html
    http://www.jsonline.com/news/wisconsin/38309459.html
    http://www.todaystmj4.com/news/local/117393028.html
    http://www.todaystmj4.com/news/local/104955704.html
    http://www.jsonline.com/news/milwaukee/69533882.html

    • Eugene, I agree 100% that those companies who dirty our land must clean it up, and the government must be first in line at bankruptcies. But that’s a whole new issue for me. Don’t have time to follow it.

  3. Eugene Barufkin says:

    Jack are you sure this is what you meant when you said – But be sure of this: NOTHING is currently fair if it penalizes the companies that bribe politicians, and that must change.

    Don’t we want to find a way ‘to penalize’ companies who “do” bribe politicians???

    Three accounting procedures that may help.
    1. Dividends should be a business expense. And only an expense if the corp has a positive bottom line and pays a little or a lot of taxes.
    2. Even more radical but necessary – No Corp should Be Able To Pay Dividends If They Get Any, even 1 dollar, govt subsidies, Local, State or Fed.
    (This may be the most effective way to stop the madness cold in it’s tracts.)
    3. All political contributions, PAC’s, direct or ads, should should have to come out of declared profits. I don’t know, if this true now. Are they, or are they not a business expense?

  4. Clearly Eugene, I didn’t make my disgust clear in that statement. No, I believe that corporations and politicians do not want “fair,” they want the status quo. Political bribery.

    I indeed agree with your #2 but I’ll leave the others to an honest CPA to answer.

    • Eugene Barufkin says:

      Jack,
      Me thinks we discovered a missing link –
      It would be Great if we had a BIG Well known CPA on our team.
      Also Great for the Corporation Personhood discussions.
      Lets pass this thought on.

  5. Yea, or an economist.

%d bloggers like this: