Thursday, July 14, 2011

Hail the Red, White and Blue

After President Nixon's visit to China in 1972, American oil companies sought to explore there. Right off, they asked the Chinese to enact a corporate income tax. The Chinese were bewildered. To a Communist Party official, taught that the state should own the means of production, a corporate income tax was a bizarre idea. Besides, who ever asks to be taxed?

All became clear when the Americans explained their intent. The American oil companies did not want to actually pay taxes, but to reduce their obligations to the United States government.
~ from Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You With the Bill) by David Cay Johnson ~
Patriotism always has been a big deal in this country. It is supposed to be about love for one's country. Too often those who are held up as the great patriots define love in a strange way.

Consider that it is often the wealthiest individuals and corporations that repeatedly are lionized as great American patriots. These are the folks who, most often, support America's increasing number of imperial wars. These are the folks who support the War on Terror which has effectively eviscerated the Bill of Rights. And these are the folks who legally or, sometimes, illegally, not only do not pay their fair share of taxes, but often pay nada and/or receive handsome rebates.

On the other hand, it's easy to pick out those who are Un-American. Ya know, anti-war protesters, environmental activists, people who support union rights, or those who clamor for economic equality and justice. It just happens to be ironic that many of the people in this category happen to pay their taxes each year. They are the ones who understand that with shared rights comes shared RESPONSIBILITIES.

So now, let's get back to David Cay Johnson as he explains how corporations legally are able to skirt their responsibilities to their fellow citizens.
The American businessmen and their tax lawyers explained that Congress taxes corporations (and individuals) on their worldwide income. With a Chinese corporate income tax, however, the taxes that they owed to the United States would go down for two reasons. The first reason is that American business profits earned overseas are not taxed so long as the money stays offshore. The second reason is that the United States allows American companies to reduce taxes on their profits by the amount they pay to foreign governments. This is not the usual deduction worth 35 cents on the dollar, but a dollar-for-dollar credit. Thus a dollar of tax paid by Exxon Mobile to Bejing is a dollar not paid to Washington.
There is even more to this explanation in Johnson's excellent book (page 41), but the part that should really grab your attention is that, in many cases, the tax that corporations pay to foreign governments represents a double whammy to American taxpayers. For one thing, since these corporations can legally dodge paying their fair share, the rest of us have to pick up the difference. What is even worse is that, in many cases, we taxpayers end up subsidizing the amount the corporations pays to the foreign government! In other words, we pay for the taxes both ways!!!

If the corporate definition of patriotism is where it's at, then I'm quite pleased to be a non-patriot!

No comments:

Post a Comment

Comments are unmoderated, so you can write whatever you want.