(Original Post)
By Clifford Drake, Published November 3, 2011
In a new study released by the Citizens for Tax Justice, a left leaning think tank, 30 of the 280 Fortune 500 companies studied paid absolutely no corporate tax, even though the current American corporate tax rate is 35%. This proves to be approximately 10% of the companies studied with an additional 28% of companies studied paying absolutely no federal income taxes. This is possible through all of the extensive tax breaks and loopholes offered, even to the point that many companies are in fact paid when recording astonishing profits. Is this sensible policy, a policy which rewards winners with additional encouragement, or just plain illogical?
To illustrate the point, the 28% of companies studied which paid no federal income taxes were actually reporting negative tax rates to the tune of $22 billion out of a $156 billion profit. That’s 14% return for having a good year, astonishing as conservatives complain of “class warfare” To quote Richard Wolff of The Guardian, if this is class warfare, “the super-rich won the war.” Yet even with these numbers, it appears as though the front running republican candidates continue to try and provide a “flat tax” code, something that to any economist spells a tax break.
As I have remarked before, it would certainly be a relief to have a more simplified tax code to resolve these dilemmas. Yet the simplification is not to give up on taxing corporations and instead provide a cheaper rate. These companies are not going to continue hiring if given tax breaks – it is a fact that has been demonstrated over and over again as politicians continue to try and shove it down the American consciousness. In fact, with massive lay-offs to satisfy investors, the opposite may even prove to be the reality.
In the end, it all boils down to a philosophical principle. If people do not want to aid the “losers” of our economic system, it makes little to no sense to give a cookie every time a company scores a profit: believe me, they’re happy enough. A simple elimination of these tax breaks could provide a huge stimulus to our debt dilemmas, something that I can only hope the super-committee has realized by now. Alas, success may pay, but that doesn’t mean taxpayers need to continue to pay them.