Thursday, December 18, 2008

Free Rides

Before the end of this month, my wife and I will have to pay property taxes on our house of more than $2,300. Our income tax will be more than this, considerably more. My wife and I are both retirees. Our income is fixed and supplemented only by working, taking on a job or jobs. Fortunately, we both have been able to find relatively satisfying work to supplement our income. We're doing OK. Unlike millions of others.

Which in a roundabout way, brings us to the point: a little discussion about who's paying the taxes in this country? Well, it's not the corporations. Let me not keep you in suspense: the middling and poorer classes are bearing the brunt of the fiscal burdens in this society. And they have been ever since the vaunted "Reagan Revolution" in the '80s. I, along with millions (let's hope they number in the millions) of other informed people, know that this is true. But the point has been underscored for me in a number of articles I've encountered lately on the Net. Let me share:

1. This piece discloses that a recent GAO report says that between 1998 and 2005, 57 percent of US corporations and 72 percent of foreign corporations operating in this country paid no federal income tax at all for at least one of those years. Not one dollar. Forty-two percent of foreign countries and over half of US companies paid no income taxes for two or more of those years. Not one dollar.

2. This information led me to do a little more probing. This article reports that the US corporate income tax is lower than in other developed countries, although organs such as The Wall Street Journal will quickly point out that the highest statutory US tax rate on corporations is 35 percent, "because the U.S. tax code offers so many deductions, credits, and other mechanisms by which corporations can reduce their taxes, the actual percentage of profits that U.S. corporations pay in taxes — . . . their effective tax rate — is not high, compared to other developed countries."

3. As sort of a grace note to these stories, there's this one. Remember Goldman Sachs? Those poor, starving Wall Street fat cats, lately recipients of $10 billion in bailout monies out of our pockets? Well, guess what? Their tax burden dropped from 34.1 percent ($6 billion) last year to 1 percent ($14 million) this year, an over 97 percent rate drop in a year's time. How? By the time-honored multinational way: shifting income to countries with lower tax burdens. One hand out for bailout billions, the other hiding billions offshore.

I'll have more to say later about individual income taxes. Don't expect the news to be any more cheery than this.
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