Will businesses ever pay their fair share of taxes? | Quigley
What do Ireland, Luxembourg, the Netherlands, Singapore, Switzerland, Bermuda and the Cayman Islands have in common?
Mentioning the latter country probably gave the answer. These are all tax havens for corporate America that pay nothing like the percentages you and I owe in federal or state taxes.
Almost all presidents, with one notable recent exception, have promised to make companies pay their fair share of taxes, but no one has had the courage to do so. Although they came to power through the votes of workers, they depend on funds from wealthy donors and they are more comfortable fraternizing with the upper class who sit on boards of directors and influence policy.
So presidents rarely seriously try to tackle the snake pit of corporate tax exemptions and often look the other way when more special exemptions are offered by lobbyists and members of Congress.
But the costs keep rising and someone has to foot the bills, so working men and women with little influence end up with them.
In the 1950s – the Eisenhower years – this Republican president levied corporate taxes much more fairly than his successors did. Most companies paid around 30% tax back then, but only pay 7% today. And many pay nothing at all despite earning billions in income.
I don’t know all the ways they deal with this, but one of them is to declare that big income was earned in a low tax place and pretend to have paid taxes there. President Joe Biden thinks closing this loophole should be relatively easy. He wants to set a minimum tax rate of 21% on corporate profits, regardless of the set of books in which they have been seized.
He hopes other countries will join in, making taxes fairer for everyone involved. But even if they don’t, his plan will leave US-based companies with enough cash to invest in new factories, new products, new services, and whatever else they need to grow.
He wants to eliminate special exemptions for things like manufacturing fossil fuels, deducting all costs related to stock options, and hiding assets and income through an array of shell companies.
For those of us making less than a million dollars a year, taxes on long-term capital gains wouldn’t go up. But the taxes paid by those who earn more than a million would be increased. It is estimated that the richest ten percent of Americans now own 85 percent of the wealth in stocks.
Amazon’s Jeff Bezos, one of the richest men in the world, whose company paid less than 10% in taxes last year, supports Biden’s proposal. The US Chamber of Commerce opposes it, saying it would make companies less likely to invest in improvements.
However, the tax cuts granted to companies by former President Trump several years ago have not encouraged companies to invest more in new developments or to share their new wealth with their employees. Instead, executives got significant pay increases and more stock options to play with.
Bermuda, 64,000 people roughly the same size as Cheyenne, Wyoming, accounted for 10 percent of US multinational corporation profits. No one believes that 10 percent of an American business’s profits are made on this charming little island with no manufacturing plant in sight. But the whole issue of tax havens is so complex that few can explain it in a way that average Americans can understand.
But you don’t need the gory details. All you have to do is look at your own IRS form and remember that the designers, manufacturers, and distributors of most of the products in your home pay less tax than you do.
An old assemblya of Jersey City, Joan Quigley is President and CEO of North Hudson Community Action Corp.
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