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General Electric paid no corporate taxes 4/5/2011 9:29:24 AM
Unlike corporate tax dodgers, good citizens will pay more taxes.
Corporate trust has taken a couple of hits lately. The NEW YORK TIMES reported that General Electric paid zero taxes last year, and Leslie Stahl of “60 Minutes” did a segment on companies dodging corporate taxes by sending their home offices overseas to countries like Switzerland and Ireland where corporate taxes are as low as fifteen percent. Leslie tracked one of them to a place called Zug, Switzerland, where she found the home office of an oil supply company. The problem was that nobody was there; Coincidentally (or maybe not) the company was involved in the oil spill in the Gulf. Meanwhile Big Business complains about a 35% corporate tax rate, which they rarely pay. They hire lawyers and lobbyists to get out of paying them, which I assume is what happened with GE. Their CEO says they lost thirty-four billion during the recession. Want to bet they get it back?
Saw another related article in the Minneapolis STAR TRIBUNE (“Executive Perks Are Piling Up” by Chris Serres and Patrick Kennedy) the other day. Corporate America claims they need to pay big bonuses and high salaries to keep the best and the brightest. According to the article executives get free limousine service, a home security system, and personal use of corporate jets.
Other Minnesota executives receive free medical benefits (God forbid public employees should be allowed to negotiate a reduction in their premiums) country club memberships, and financial planning services. According to Serres and Kennedy, of the fifty firms in their study, the average firm paid out over a hundred thousand in perks last year.
Once one executive gets a perq and another company hears about it, you’ve got a sort of monkey-see-monkey-do process called “Benchmarking” which is hard to eliminate. During a recession, when a company is “forced” to downsize, these perks often stay in place.
Serres and Kennedy mention a snowmobile manufacturer that is moving much of its operations to Mexico that offers free clothing and annual physicals at the Mayo Clinic. Some companies also pay the tax bill for the perks given executives. So then, could the problem be the corporate structure? Just as congressmen can vote themselves a pay raise, the best health care in the country, plus a pension, executives can feather their own nests at the expense of the poor peon workers who get to stand in the unemployment line, and God forbid they try to unionize.
Meanwhile elsewhere in Minnesota the new democratic governor, Mark Dayton, suggested the legislature add a three percent surcharge to the top one percent of taxpayers in Minnesota. The GOP went nuts. This just so happens to be the first time in forty years that the GOP gained control of both the senate and the house, so it would have been pretty tough to ram that through anyway.
Not all corporate entities are out to ream the public however. UCare, a non-profit Health Insurance Company, donated thirty million dollars to the state of Minnesota which has a five billion dollar deficit. UCare was created by the University of Minnesota Medical School; it covers 200,000 low income people and those with special needs in public health programs and Medicare recipients. Medica is also mulling over making a contribution.
UCare might be said to be dependent on government programs for their business, but there are other businessmen out there who don’t buy the conservative party line. Jim Pohlad, son of former Minnesota Twins owner and Banker Carl, purchased a full-page ad along with 200 other Minnesota businessmen, complaining that he wasn’t paying enough taxes. The Minnesota governor at the time, Tim Pawlenty, laughed and said he’d take their checks. Pawlenty then set about balancing the state budget with accounting tricks that landed the deficit in the lap of the new governor.
As we can see from the Switzerland scenario, there’s no assurance those companies are going to spend the corporate tax cuts the GOP wants to give them on jobs. As I write, they’re creating one million jobs . . .in Southeast Asia. Why should they hire more people, when American workers are the most productive in the world, when they can hire part time workers with no health care benefits and no pensions?
Conservative commentators like to claim that the top twenty percent of American earners pay most of the taxes, while the bottom ten percent pay none. Like they’re getting ripped off and those poor people are a bunch of freeloading bums. That’s just mean-spirited. Those people in the top one percent who were going to have to pay that surtax under Dayton’s plan should pay it voluntarily and set a good example. Like Jim Pohlad, they ought to know how lucky they are, that they could just as easily be one of the bottom one percent.
