Yesterday the WaPo published an article about a November report authored by members of Citizens for Tax Justice and the Institute on Taxation and Economic Policy. The authors took an in-depth look at the extent to which corporations dodge their tax burden in the United States.
The authors examined the finances of 280 corporations from 2008 through 2010 and found that 30 paid zero taxes or used loopholes to wind up with negative tax rates. Local utility Pepco Holdings paid the lowest rate of all the firms investigated, clocking in at nearly minus 58 percent.
Under the federal tax code, corporations are supposed to pay 35 percent of their profits in taxes. But the study found many of the companies used legal tax breaks that allowed them to pay lower rates than ordinary Americans.
Of course, the corporate PR departments are pushing back, issuing statements that they are complying with all legal requirements with regard to taxes. Yeah, no shit, that’s part of the problem. They are legally allowed to escape much of their tax burdens, and even receive refunds, due to the multiple legal escape hatches and loopholes. The fact that it’s legal don’t make it right, son.
So, weirdly enough, I read this article in conjunction with Matt Taibbi’s blog entry in Rolling Stone, on NY Mayor Bloomberg’s “Marie Antoinette” moment. This is where, when asked about what he thought of the Occupy Wall Street movement, Bloomberg suddenly started channeling Rush Limbaugh, and said:
“I hear your complaints,” Bloomberg said. “Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have gotten them without that.”
Taibbi, of course, is not about to let that slide.
This whole notion that the financial crisis was caused by government attempts to create an “ownership society” and make mortgages more available to low-income (and particularly minority) borrowers has been pushed for some time by dingbats like Rush Limbaugh and Sean Hannity, who often point to laws like the 1977 Community Reinvestment Act as signature events in the crash drama.
In fact, just the opposite was true. This was an orgiastic stampede of lending, undertaken with something very like bloodlust. Far from being dragged into poor neighborhoods and forced to give out home loans to jobless black folk, companies like Countrywide and New Century charged into suburbs and exurbs from coast to coast with the enthusiasm of Rwandan machete mobs, looking to create as many loans as they could.
They lent to anyone with a pulse and they didn’t need Barney Frank to give them a push. This was not social policy. This was greed. They created those loans not because they had to, but because it was profitable. Enormously, gigantically profitable — profitable enough to create huge fortunes out of thin air, with a speed never seen before in Wall Street’s history.
The typical money-machine cycle of subprime lending took place without any real government involvement. Bank A (let’s say it’s Goldman, Sachs) lends criminal enterprise B (let’s say it’s Countrywide) a billion dollars. Countrywide then goes out and creates a billion dollars of shoddy home loans, committing any and all kinds of fraud along the way in an effort to produce as many loans as quickly as possible, very often putting people who shouldn’t have gotten homes into homes, faking their income levels, their credit scores, etc.
Anyway, the wingnut nonsense about poor people being to blame for their own poverty aside, the comparison to Marie Antoinette’s infamous moment of cluelessness got me thinking about the French revolution, and I went to the trusty online halls of Wikipedia to take a quick look. In the course of cruising around various articles on the topic, it became clear that (and I am obviously simplifying greatly here) France in the 1780’s looked very similar to us now. Inordinate tax burdens on the poor and middle class, while the rich and well connected avoid taxes altogether, and in many instances siphon off resources, an extraordinary national debt as a result of massive expenditures on war and on luxuries for the wealthy, and an utter obliviousness on the part of the wealthy and powerful as to the extent of the suffering going on around them.
You know what would be nice? If we managed to gain needed reforms without crisis. I don’t hold out much hope though.