This is the time of year when everybody thinks about taxes, since the deadline for calendar-year taxpayers to file their 2010 tax return is fast approaching on April 18.
There is a good bit of tax rhetoric out there intended to encourage people to see taxes as a bad thing. The right-wingers talk about "starving the government"--meaning that if they can just keep taxes low enough, then revenues will lag so far behind expenditures that they can more easily convince households used to thinking in terms of balancing their own budgets that the government is "bankrupt" or "out of control" and that spending needs to be cut, period. That's what has been going on in this year's Congressional chicken games. The GOP, with lots of financial backing from "tea party" supporters like the Koch brothers and the major corporate lobbyists like the U.S. Chamber of Commerce, having been hitting the "yikes, it's a deficit" button and conditioning the American public to thinking that we have to cut government spending to the bone (except for the GOP's favorite boondoggle, the American military complex).
There are two important things worth remembering when these "starve the government" "government is bad" "taxes are bad" ideologies are being trumpeted on every corner.
First, Ronald Reagan lied when he said "the government is the problem." We have government because we can do things collectively that it is well nigh impossible for a single person to do. Important actions that require the government collective include pollution control, disaster prevention, holding financial giants accountable, holding big manufacturers accountable for negligent harm caused by their products, funding basic research that can be a factor in making millions of lives better, funding human capital development (education, job training), and creating a safety net for those we don't know or don't see who are nonetheless vulnerable because of age, illness, job loss or other factors. To know how much government funding we need, we have to decide first what government needs to do.
Second, all those anarcho-libertarians are wrong when they say "taxation is theft" and "taxation is evil". Taxation is one of the important threads that binds a society together. BECAUSE we are a community, we know that our community needs have to be met and taxes provide the revenues to meet those needs. By taxing ourselves, we establish even more firmly the community that we share. Taxation acts as a binding force and it also acts to ensure that resources are allocated more appropriately than they would otherwise be in a world of "brute capitalism" that would always reward the have-mores with more and the have-lesses with less. Taxes from the community members are spent in pursuance of the many government programs that the community wants to carry out.
Some of our "tax exempt" organizations are busy trying to make people feel negatively about taxes. Look at the Cato Institute, or the Claremont INstitute, or the American Heritage Foundation or the Americans for Tax REform organization, or the various branches of the so-called Tea Party, or the (purportedly nonpartisan) Tax Foundation. They expend vast efforts and sums of money preaching a gospel of tax cuts and suggesting that taxes are anti-competitive, theft, discouraging of investment, etc. They don't disseminate the many wonderful things that our tax dollars, working on our behalf with out a privateer in the middle skimming off vast shares of "rent profits" can and have done for us, from the engineering marvels of the Hoover Dam to the inception of the WorldWideWeb to protection of our food and water to cures for deadly diseases.
So it is always good to see other groups that help to "illuminate the importance of taxes in providing for our country's past and continued success" and provide ordinary Americans a window on the intricate world of sophisticated tax avoidance planning by wealthy corporations and individuals, as in the Demos policy center's campaign to shed more light on American taxes.
Today's piece is called "Loophole Land: Time to Reform Corporate TAxes", Our Fiscal Security.org, Apr. 12, 2011. It includes some good graphs (reprinted below) showing the decline in the role of corporate taxation in funding our important government programs--from 4.3% of GDP in 1955 to only 1.3% of GDP in 2010. In spite of our reasonable statutory tax rate--the tax code says that corporations with roughly $20 million or more in income will pay taxes at 35%--our corporations pay tax at much lower rates, generally ranging from 0% to in the lower to mid twenties. It shouldn't be a surprise, therefore, that the United States is a tax haven for corporations, with corporate taxes as a percent of GDP much less than for our peers like Canada, France, the UK, and Germany and loopholes lobbied for and written into the tax code that permitted two-thirds of corporations to pay no tax from 1998-2005, even though many of them reported high profits for financial accounting purposes.
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