Saturday, September 03, 2011

Taxes, Interrupted

Who pays taxes in America and how much? It depends who you ask, of course. As I pointed out in a recent post, many Republicans have been arguing on and off for years that the rich pay too much and the poor and working class too little. Democrats tend to argue that the rich pay too little and the middle class too much. On percentage terms, it is true that the rich pay a larger proportion of overall tax receipts, but percentages of overall income are a different story entirely. This is well-trodden territory for me, but I'd like to talk about our corporate tax system a little more here.

Our corporate tax rates are among the highest in the world, but tax receipts from corporations are among the lowest in the industrialized world. This is the case even as corporate profits have skyrocketed in recent years. To put this in perspective, Salon has an interesting article today highlighting the problem: Salon War Room. Essentially, corporate CEOs give a lot of money to politicians who in turn tend to give them breaks on their taxes and those of their companies. Here are some highlights:

- The CEO of Coca-Cola made $19,000,000 last year, while Coke only paid $8,000,000 in taxes. He has contributed $63,000 in the past 3 years all to Republicans, not even counting all of the lobbying that the company does. Coca-Cola made $11.8 billion in profits (a 73% increase from 2009) on $35.1 billion in sales) Atlanta Business Journal. That is $8 million on $11.8 billion or .68%! 

- The CEO of Prudential was paid $16 million in 2010, while the company received a $722 million tax refund. In the past few years, he has contributed $108,200 all to Democrats (American democracy is equal opportunity corporate welfare). Prudential made $831 in profits just last quarter. 

- Motorola CEO Gregory Brown received $14 million in compensation last year, while the company paid just $7 million in taxes. Since 2008, he has given $67,000 in political donations, again all to Democrats. Motorola had $633 million in net profits on $19.28 billion in revenues. That is a tax rate of slightly over 1%.


I did a post a little while back about how many Fortune 500 companies get huge tax rebates even on record profits. For those few that do pay, including Coke and Motorola, that percentage hovers around 1%. But of course the problem is out of control spending by Congress and State Legislatures, unions and the poor and working class paying too little in taxes ...

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