The big heist
"In 2011, individual income taxes contributed $1.1 trillion to federal coffers, while corporate taxes added up to $181 billion" (The New York Times, 5/22/13). This is a profound change in the proportions of former decades. Reporting on the latest outrage, the same Times article says that Apple, "the nation's most profitable technology company .shifted at least $74 billion from the reach of the Internal Revenue Service between 2009 and 2012." And Apple is not alone. "Multinationals based in the United States," including Google, Starbucks, Hewlett-Packard, Microsoft, Abbott Labs, and Amazon, "now hold more than $1.6 trillion in cash classified as 'permanently invested overseas.' "
Can there be more convincing evidence of the conflict between profit maximization and public well-being? According to The Times, a congressional committee "estimated that if foreign profits of United States corporations were fully taxed it would generate an additional $42 billion this year for the government - about half the amount of the automatic spending cuts enacted as part of the so-called sequester." This means that teachers and hosts of other public employees are being laid off and essential government services and oversight are being eroded so that corporate profits can be maximized. 115,000 federal employees - 5 percent of the force - are on "unpaid furlough."
This might have a remote justification if - as advocates of the system maintain - these profits were invested in productive facilities that would employ the masses of people currently without work. But they are not. They are used instead to further enrich the minority sharing ownership in the corporations - which further feeds the unprecedented inequality gap. When Apple recently wanted to distribute some of its bounty to investors, rather than repatriate the money from overseas' caches and pay U.S. taxes on it, it borrowed $17 billion at interest rates low enough to save money on the deal.
It's easy for the corporations to outfox an already cooperative government. A New York Times article (3/25/11) reports that GE, through fancy bookkeeping, paid no corporate taxes in 2010 despite worldwide profits of $14.3 billion and domestic profits of $5.1 billion. Its tax department, referred to as "the world's best tax law firm," has over 500 employees headed by a former U.S. treasury official and is staffed by ex-IRS people and former members of congressional tax-writing committees - a dazzling example of the incestuous relationship between government and profit. Despite a 35 percent corporate tax rate, GE's effective rate was 7.4 percent - of which it paid nothing.
Because capitalism is globalized under the aegis of international corporations, the problem is not exclusively American. Anyone following events knows the profound plight of revenue-starved European governments and the EU's worse-than-depression-level unemployment. The elite world of big international capital, transcending nation-states, is way ahead of separate, individual governments. It can blithely play one nation against another for tax breaks, as it plays state against state here in the U.S.. The situation is so extreme that even Britain's Conservative prime minister, David Cameron, was forced to say, "We need a truly global solution" (NYT, 5.22/13).
Our own government, however, remains unperturbed. When Apple CEO Timothy Cook came before a senate committee to explain his tax-evasion policies, the senators virtually fawned over him. "They called him a 'pretty smart guy' and praised the 'incredible legacy' his company had left. They gushed over his products, calling Apple 'a great company' that had managed to 'change the world' .the overall mood of the panel was summed up by Senator Claire McCaskill, a Democrat from Missouri, who declared, 'I love Apple!'" (NYT, 5,23/13).
Who are these people representing? Said a veteran Washington lawyer in the same article, "They were just not going to go up against an American success story." Knowing the full story, we must ask, "Success for whom?"
Ours is clearly not a people's democracy as billed, but a clearing-house for the new plutocracy. Only the people can clear the house for themselves. They could start by taking the advice of my bumper sticker: "Question Capitalism."
Andrew Torre lives in Landgrove.
TALK TO US
If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.