I received a comment on my previous post concerning G.E. paying no corporate income taxes in 2010. I thought it contained the misconception held by many, including conservatives, that forcing companies like G.E. to pay more in corporate taxes is a good thing. Obviously, I failed in that post to clearly explain why this is, so we’ll try again. First, the comment.
Do you own a corporation? J/k… sort of. I might agree with you if it has not been pointed out time and time again that corporations constantly take advantage of any loophole to maximum effect and consequently continue to abuse not only the working class of the USA, but world wide. I know, that’s a pretty far out liberal opinion, but for the same fact that you pointed out, “Corporations will exploit every loophole possible to protect their profits,” I don’t trust corporations.
It does not benefit the American people if a corporation makes billions of profits, so why not tax their profits to benefit my great country? It might not benefit me personally, but when their prices go up I can make the decision to purchase their products based on my budge instead of being forced to pay higher taxes because the corporations are abusing loop holes that I don’t have an army of accountants and lawyers to help me do.
Sorry, I’m not trying to start an argument, I just care about people, and the treatment the common people (i.e. not shareholders) get from corporations is very frustrating. I don’t know what the answers is, but I’m so tired of reading about the next crisis we are facing largely because of the “exploit every loophole possible to protect their profits” mindset, which, if I understand correctly, has your wholehearted support.
So yes, to answer your question, I’m mad at G.E. because the people running it don’t feel they should support American when they have an abundance of profit. Let’s be clear, it’s not like they are paying no taxes, they are getting a $3.2 billion dollar tax credit. 3.2 billion. When you are counting in the billions, is one little measly million going to matter? I’m not saying a million dollars is inconsequential, but how many individuals income tax does it take to add up to a million dollars? I honestly have no idea no idea, but I’m sure it’s quite a few.
This is wrong on many levels, so we’ll take them one at a time. It is a fact that corporations don’t pay income taxes. The consumer does. Those taxes are a cost of doing business and are passed along to the end consumer through higher prices. So when you support the idea of forcing a corporation to pay more in income taxes, you then support the idea of paying higher prices yourself. You can’t penalize a corporation through higher income tax rates, you only end up punishing the consumer.
This is the type of sales pitch Obama used on the campaign trail. He would ask a partisan crowd if they were tired of paying high gasoline prices. They would gleefully scream yes! What did he propose to do about it? Impose a windfall profits tax on those evil, greedy oil corporations. Doesn’t that sound great? Stick it to ’em! Wrong! It’s the same reasoning. Slap a windfall profits tax on an industry and those corporations will just as gleefully pass along those costs to the consumer. So you end up with even higher gas prices!
Take his energy policy. When he did a radio interview in San Fransisco, he made this statement. I’m paraphrasing. He said that under his plan of a cap-and-trade system, electricity prices would necessarily skyrocket. Why is that? Because whatever punitive measures he employs against the energy companies, those costs will be passed along to the consumer. Obama knows this, that’s why he made the statement. He knows that in order to force Americans to change their way of life and drive them into more green energy policies, he needs prohibitive costs to accomplish it. So you simply apply higher costs to industry to pass along to the consumer.
This isn’t theory or opinion. It’s a fact. Just as it’s a fact that the United States has the second highest corporate tax structure in the free world. So what will happen if those of you who support attempting to punish corporations through higher corporate income tax rates? They will simply relocate their corporate headquarters offshore in order to avoid the higher rates if they become too prohibitive so they can’t pass along the costs to the consumer. The very thing those in opposition are crying foul about.
The commenter makes the assertion that there is no benefit to the American people if a corporation makes billions in profits. Really? I have a couple. How about jobs? Or dividends for shareholders? This idea that Obama has been peddling that at some point you’ve made enough money is straight out the statist’s handbook. If you support profit caps, you cannot support the free market. Why this concept gets lost on so many people is very unsettling. It’s just fact that any private enterprise is in business for one reason, and one reason only. To make profits. Sorry, if you don’t like the idea, than you don’t support capitalism.
Let me be clear on my position. I am not a shill for corporate America. I have no financial interest in taking my position. In fact, I take the opposing stance. I support seeing the consumer pay less. The corporate income tax is nothing more than a hidden tax on Americans. It is you that are being screwed, not the corporation.
Now, on to loopholes. They should be completely eliminated. The only thing worse than an unfair system of taxation is one filled with loopholes for the well-connected to be able to navigate around. No way should G.E. have received a tax credit of over $3 billion dollars. But they did it with-in the confines of the system. Yes , it’s a crony-capitalism system. But you’ll never fix it through an income tax the corporations don’t pay anyway.
The taxation system as a whole is set-up to benefit the well-heeled, not the individual. This is where the fix that will result in satisfying those who dislike the current system must begin. This is where you take on crony-capitalism. This is where you eliminate loopholes and even the playing field. Remember, it’s a proven fact that lower tax rates increase overall tax revenue. Corporate tax rates, if we’re going to have one at all, should be substantially lowered. That’s a most difficult concept for many to absorb, including most of the economists out there today. Raise the rates, particularly in an effort to punish, will result in one thing. Corporations leaving our shores in droves.
My point overall is that you will never succeed in punishing through taxation. Not in corporate America. You want to get mad, get mad at the enablers. Government. Yes, the usual. They set the rules. They create the loopholes. They pick the winners and losers. Corporate America merely takes advantage of what is available to them. That includes lobbyists. Change the laws if you don’t like it. Support candidates who aren’t paid off hacks for these corporations.
I’ll never get on-board with those who believe a corporation should exist with some sort of moral conscience. Sorry, but a corporation will always be an inanimate object that exists only to maximize profits and shareholder returns. Whenever government attempts to legislate morality, it’s an abject failure. Comprehensive tax reform can also include incorporation laws. We must remember that our beloved politicians are amongst the primary beneficiaries of the system in place. They are not inclined to change it voluntarily. Attacking corporate America also harms the other side of the crony-capitalist arrangements – the politicians.