Breaks and broken
from David Ruccio
Yesterday, I argued that the U.S. tax system is broken. That’s because many corporations pay no federal taxes and, even when they do, the effective rate is much lower than the statutory rate.
And that’s just on the tax-revenue side. On top of that, as Oxfam (pdf) shows, U.S. corporations received a wide variety of subsidies. For example, from 2008 to 2014, the top 50 U.S. corporations collectively earned $4 trillion in profits, paid $412 billion in federal taxes, and received $11.2 trillion in support in the form of loans, loan guarantees, and bailout assistance from the federal government.
There is no doubt that data from this time frame is shaped heavily by the federal programs, like the auto-bailout and TARP, that were created to deal with the largest economic crisis since the Great Depression. Additionally most loans and bailouts are paid back in full with interest. There are also relevant distinctions to be made between companies and sectors on their tax practices and their receipt of federal support.
Companies benefit in different ways from federal investments and from tax laws, only some of which are revealed in the data Oxfam analyzed. The data also does not show the value of other forms of federal support that companies receive beyond loans, loan guarantees and bailouts.
Nonetheless, the data is useful to observe in aggregate because it puts in stark relief the taxpayer financed benefits large companies in general enjoy in relation to the taxes they pay.
In addition, those same corporations hold $1.4 trillion in offshore cash reserves, which are not subject to taxation. And they spent roughly $2.7 billion on lobbying from 2008 to 2014.
That means for every $1 they invested in shaping federal policy through lobbying, they received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.
Those breaks indicate that not only is the U.S. tax system broken; so, too, is the political system.
Except, of course, for U.S. corporations.