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Why You Paid More In Taxes Than 30 Fortune 500 Companies Combined
You might be wondering why if you paid federal income tax, you paid more than 30 Fortune 500 companies combined over the last three years. They got to pay zero dollars in taxes (some of them even got money back), but not because they were broke; in fact, they made $160 billion in profit over the last three years. As to the “why”, well, way back in 2001, our fearless decider George W Bush enacted a series of tax cuts and changes that opened more loopholes to corporations. In fact, by 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40%. The next time someone asks you what the 99% want, you might remind them of this outrageous fact.
See, it wasn’t always this way.
On Rachel Maddow last week she talked about a new report that showed that Warren Buffett was on to something when he demonstrated that he paid 17.7 percent in total taxes (payroll plus income), whereas the average for his office was 32.9 percent. In fact, there are 30 Fortune 500 companies that paid zero taxes or less for the last three years. If you paid federal income tax in the last three years, you paid more than Wells Fargo, General Electric, Verizon, Boeing, DuPont, Duke Energy, PG&E, and Wi Energy company combined.
Watch here courtesy of MSNBC:
Transcript from MSNBC:
A new report out today shows that Warren Buffett is not alone in scoring a way sweeter deal on his taxes than, say, his receptionist. At least 30 Fortune 500 companies paid zero taxes or less for the last three years. Or less means sometimes the government pays them. Over those three years those 30 Fortune 500 companies made $160 billion in profit. But they still paid zero federal income tax. Or even less than zero.
If you paid anything in federal income taxes over the last three years, you personally as an individual human paid more federal income tax than Wells Fargo, General Electric– hi, boss — Verizon, Boeing, DuPont, Duke Energy, PG&E, also that Wi Energy company that dumped this crap into Lake Michigan this week — you paid more than all those companies combined.
So, if Wells Fargo was considering turning itself into you, one of the down sides for Wells Fargo of doing that is that you actually pay more income tax than they do as a company. But today at the G-20, another zillionaire took your side in this anyway. Bill Gates today urging the world’s 20 major economies to support the popular idea of a financial transaction tax.
We used to have one of these in this country from 1914 to the mid ’60s. Then they repealed it. The basic idea is a very, very small tax, something like a quarter of a percent, on financial trades.
Rachel went on to argue the merits of imposing a financial transaction tax, something supported by such varied interests from Democrats Tom Harkin of Iowa and Representative Peter DeFazio of Oregon (who have introduced a bill that would reinstate the financial transaction tax in this country) to the Pope. Yes, the global financial tax has global support and it would be an excellent rallying cry for the 99%.
However, even as we center around a proposed solution to the problem, a fact that must not be skipped over is the fact that you and I pay more in taxes than 30 specific Fortune 500 companies combined. The next time someone asks you what the 99% want or calls this a class war, this one single statistic answers that question.
I support the American Jobs Act and the proposed .5% increase on taxes for the top 1%, but it’s important to note that companies need to start paying their fair share, and contributing just like the 99% do to our revenue (and hence deficit) problem. Raising the tax rate does not solve the problem if the loopholes are still in place.
This is nothing new. The 2001, 2002, and 2003 tax cuts created a tax system custom made for greedy Scrooges who didn’t mind screwing the average American citizen in order to grow their own wealth. According to Reclaim Democracy.Org, the gap between the statutory and effective tax rates for corporations widened by a fifth between 2001 and 2003 (hello trickle down “job creators” tax breaks):
Corporations are supposed to pay 35% of their profits in income taxes, but between the years 2001 and 2003, only a small amount of profitable Fortune 500 companies actually paid that amount. In fact, the effective tax rate (versus the statutory tax rate of 35%) for 275 profitable Fortune 50 companies dropped by a fifth from 21.4% in 2001 to 17.2 % in 2002-2003.
Even more staggering are the following statistics:
• In 2003 alone, 46 companies paid zero or less in federal income taxes. These 46 companies told their shareholders they earned U.S. pretax profits in 2003 of $42.6 billion, yet they received tax rebates totaling $5.4 billion. Almost as many companies, 42, paid no tax in 2002, reporting $43.5 billion in pretax profits, yet receiving $4.9 billion in tax rebates. From 2001 to 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40 percent.
• In 2001, the Treasury paid corporations $40 billion in tax refunds, a third more than the 1998-2000 average.
• Then in 2002 and 2003, after the law was changed to expand tax subsidies and make it easier for corporations to carry back excess tax breaks to earlier years, corporate tax refunds skyrocketed to an average of $63 billion a year – more than double the 1998-2000 average.
So, starting in 2002, after the law was changed, corporations’ tax refunds doubled to an average of 63 BILLION dollars a year. Loopholes and tax breaks cost the federal government more than $1 trillion a year in lost revenue. Two wars were also started during this time, and left off of the budget, lest anyone is wondering how we got into the deficit we are currently facing.
Any business owner knows that if you cut revenue and buy (on credit/loan) a bunch of expensive stuff that isn’t even for your company (and thus is not building your company or its assets in any way) – but say, your company is buying stuff to help the company your parents own, eventually your company will be forced to pay the piper. The difference is that if you are a small business owner, you don’t get to hand your business over to your sworn enemy after hiding the real numbers and then gloat from the corner as they realize how you just screwed them but good.
And that’s just one reason why the Republican belief that the country should be run like a business is flawed. If they were running a small business, they’d be accountable. Perhaps when Republicans run the country they run it like a too big to fail conglomerate. We see how free markety that model is not.
The bottom line is that companies use the same resources as we do, in fact they use more of them, yet they often don’t pay the statutory tax rate and some of these companies got money back from the government, even as they made profits. It’s glaringly obvious that we need tax reform to close the loopholes for corporations.
Many Democrats have proposed closing these tax loopholes, only to be shot down by the defenders of “job creators”/corporate puppets; aka, Republicans. President Obama is focusing on closing loopholes, but he’s getting a lot of push back from congressional “conservative” Republicans (conservative is in quotes because a real conservative would not try to run a business like this). These same people must be intentionally forgetting that Reagan signed tax reform into law on October 22, 1986 that raised taxes on corporations while decreasing taxes overall on individuals resulting in what is referred to as “revenue neutral” change.
Today, when Republicans talk about “revenue neutral” they mean just the opposite; they are protecting the corporations at all costs. It’s important to note, however, that within individual income taxes, Reagan raised the taxes on the lower incomes and lowered them on the top incomes — hence his status as beloved savior of the wealthy (this is the only time in history that the top personal income tax was lowered while the bottom got the shaft at the same time). But Reagan did increase taxes on corporations. Of course, corporations were less powerful then than they are today (as noted by a Republican raises their taxes).
Based on his books, President Obama is a strong believer that the government should be responsive to the people rather than the people responsive to the government. For example, Obama doesn’t think elected officials should use their office or the people use the courts to force change based on an ideological agenda that is not supported by the people. This is what he meant when he told us, “Make me do it.” Obama, as a constitutional lawyer, believes more strongly in the organic process of the people calling for the change, demanding it, and laws following naturally from public support such as the growing Occupy USA movement.
Occupy USA is making our voices heard, calling for and demanding changes in the tax laws and overall economic justice for the 99%. The louder the 99% is the more likely we are to be heard over the big money of corporations. The fact that we pay more in taxes than 30 specific Fortune 500 companies combined, whose profit over that time period was $160 billion, is an outrage. Where are the shared sacrifices?
The 99% want their country back, and by back, they mean before Reagan screwed the bottom income levels. But we’ll take Reagan’s stance on corporate taxes if that’s what it takes to get a little fairness up in this house. Close the loopholes!