Thursday, June 29, 2017

The Trump Nation and Taxes

"Tax reform" is in the news. The GOP has promised to do that. Golly gee, wonder where that is going? With the GOP now solidly in charge all around, any halfway sentient person already knows, except for Trump supporters of course.

Almost no one likes paying taxes, although you might think by all rights they should. For most people, and corporations too for that matter, the more income or profits you have, the higher the tax rate is and should be. So, all in all, the more you make, the more you would keep, even after a higher tax rate - and the happier you ought to be, right?

But, that's not how it works in reality. The more money people - or corporations - make, the more inclined they seem to be to use tax avoidance scenarios. 

For individuals, unless they are in that top 5% category, the kinds who use tax shelters and offshore banks, there is a limit to how much taxation you can avoid without going to jail. Small businesses are generally in the same category. But, for big corporations it is an entirely different story,  These guys operate under an entirely different set of actions. Same rules, yes, but most assuredly a more imaginative, and sometimes even borderline (and over!) criminal way of utilizing them.

Not all big corporations do so, lest I be accused of being anti-capitalist. (Actually, I do sometimes flirt with being anti-capitalist, be that's a subject for another story). Some big companies do stand right up to pay their fair share, honestly and completely with no cute cheating. But a majority of the bigger companies DO NOT. And, the bigger and more multi-national they are, the more likely they are to be creative in avoiding taxes.

Here's a chart with the trajectory of US corporate tax rates over the years. The takeaway is, starting from a high of 58.8% in the late 'sixties (during the Richard Nixon administration!), there has been a more or less steady decline ever since to 35% beginning in 1993, and where it now stands today. Historically, you must go back to BEFORE WWII to find a lower rate!
Corporations, and their hand-maidens in Congress like to point to this chart showing, among other things how the US is among the highest corporate taxing nations in the world.  And, I'd like to point out right here that both major political parties have their hands in this evil pudding. It's not just a GOP thing, although now with Mr. Trump in office - and bloviating about his 'tax reform' plan the GOP is determined to reduce the official rate even more!

Ah, but there's also a multi-trillion dollar catch. The chart above is merely the official, US Department of Revenue rate. This chart accompanied always by all the GOP venting over 'high taxes' is a prime example of what I call a 'Graphics Lie". The rate actually PAID by corporations - called the 'Effective Rate' - is altogether different, and is but a very pale shadow of the official rate. The Effective Rate for corporations for recent tax years in the US is an aggregate 12 percent or so. In 2011 - the latest year I can find - the Effective Rate was 12.2% - the lowest since World War One! The current international average is over 16 percent.

The tax rate for an individual in the US is 15% for income between $9276 and $37650 for crissakes! For a 'head of household it's 15% for income between $13251 and 50,400! Something smells very rotten in Denmark if you ask me!

Here's a chart over the period since WWII, with the actual Effective Rate., i.e., "Reality":
Overall, corporations today pay just 9% of US Federal Revenue, down from over 30% in the 'fifties!

Below is just one example from down under. There are hundreds more for anyone interested in finding out more. I, myself am just simply too disgusted - and mostly naive too I know, to root them out. Taxation is a tedious, dry and dusty subject after all, truly loved only by the devious, the OCD and the anally-retentive I'm guessing:

Rupert Murdock's News Corp has one cute little trick it employs to avoid paying taxes in Australia (I'm sure they are creative in avoiding taxes everywhere else too):  The gist of it is they loan money to themselves from a foreign subsidiary at an exorbitant interest rate (at twice the industry average), then deduct the interest. The truth is, they loan money to themselves at high interest, deduct the interest as an 'expense', and meanwhile pay the 'interest' to themselves on the other end. I'm sure the 'subsidiary' does the exact same thing in reverse too, to avoid taxes on their end. It's a win-win-win-win as far as you like for Murdock and the News Corp.

Multi-nationals spend big bucks employing tax lawyers to find loopholes to avoid taxation. The thing to remember, however, the loopholes would not be there in the first place without the legislation.

And, here is where the story becomes truly appalling. Now that corporations are defined as 'people' in the US, and there is no limit to their political contributions (read, 'bribes to legislators'), it is party time in corporate boardrooms. Corporations are now in the position to buy any legislative favors their itty-bitty little hearts desire - and they are doing so with wild abandon. Thus, now corporations are completely free to vote with their money, and all their shareholders are too. This is what amounts to de facto double-voting in the interests of corporations. Am I right?

So, if corporations are 'people', why aren't they paying taxes like people you ask?

Here's a chart which will put that in perspective for you. This chart shows what percentage of US taxes corporations pay, and what individual income tax payers pay. FAIR WARNING! This one just might blow your mind:
It's pretty damned obvious that corporations have turned out to be pretty damned special as people isn't it? And, that is the nut, kernal, and gist of this story.

There's a long list of big corporations who paid no taxes at all, with some getting billions back in tax 'subsidies'. Here are just a few out of the hundreds:

Try to keep these things in mind the next time you spend your hard-won dollars. Also remember, that corporations are heavily into propagandizing these days. They are free to spend as much as they like - those expenses are tax deductions for corporations after all - to influence public opinion in their favor, while the individual may not. No tax deductions for you or me for such silly things!

The sad fact is that the US is now a true oligarchy in all but name. And if Herr Trump has his way, our nation just could get officially renamed as "The Trump Nation of and for Trump and Other Companies".  Then, maybe Trump will feel himself on an equal footing with Putin/Russia Inc.

But, I doubt it. Donald J. Trump is an unsatisfiable megalomaniac. Too much is never enough for that man!