In the debate on whether to end the Bush Tax Cuts, the
nominal (or statue) tax rates were salient. Much less was said of the effective rates, which are calculated by
dividing the actual tax paid by total
income (individuals) or net income (corporations). According to the New York
Times in 2011, although “the top corporate tax rate in the United States is 35
percent, one of the highest in the world, companies have been increasingly
using a maze of shelters, tax credits and subsidies to pay far less.” The name
of the game in all too many corporate tax departments is to minimize the tax
due as much as possible. No countervailing notion of “corporate citizenship” or
even “fair share” exists in that world of single-minded minimization. Put
another way, responsibility does not
compute in the operative business calculus. Lest it be concluded that that
calculus itself is the reason for the tax avoidance (which is legal, unlike tax evasion), the financial power of
business to essentially bring government “in house” ought to be recognized as
part of the larger problem of plutocracy.
In 2010, General Electric (G.E.) reported global profits of
$14.2 billion, $5.1 billion of which came from operations in the United States.
Rather than owing any federal income tax, however, the company claimed a tax
benefit of $3.2 billion. Behind the “fierce lobbying for tax breaks and
innovative accounting that enables [the company] to concentrate its profits
offshore,” the company’s tax department was led at the time by a former U.S.
Treasury official, John Samuels. Moreover, the Times reports that the
department included “formal officials not just from the Treasury, but also from
the I.R.S. and virtually all the tax-writing committees in Congress.” G.E. had
essentially brought the tax-writing and enforcement skill of the U.S.
Government “in house.” As paid employees of G.E., the formerly government
expertise was then put under the aims of the private company, which are not
necessarily in line with the public weal.
Put another way, U.S. companies of such financial
wherewithal as to have annual profits of billions and billions of dollars can
appropriate and harness governmental machinery at the expense of the republics
and the General Government. The issue is not simply too much tax avoidance,
which shirks any sense of responsibility or fairness; rather, the problem is
whether such large and powerful private enterprises
are compatible with a democratic form of government. Lest this question be
interjected into public discourse, vested powerful interests keep us
preoccupied with secondary issues, such as nominal individual tax rates, off-shore
factories, and NAFTA. That the mainstream media in the U.S. consists of large
companies that are owned by even larger conglomerates (e.g., NBC was owned by
G.E. before being bought by Comcast) only makes it easier for corporate America
to control the public discourse through interlocking directorates. Meanwhile,
companies like G.E. and Exxon continue to gain wealth and power.
The question may be whether the American people writ large
would object to the threat—or even come to view the mammoth companies as
threats to the American republics—were the extent of corporate power over the
governments transparent. The mantra of many Americans in the 1950s, for
example, could be said to be, “What is good for GM is good for America.” Put
another way, economic growth is in everyone’s interest. But is prosperity so
wide-open? That corporations increase their stock prices by shedding jobs suggests
that what is good for the Dow is not necessarily in the public interest.
Abstractly speaking, the good of a part is not necessarily the good of the
whole. In political economy, the salience of the parts can be rather subtle, or
even subterranean, while the public good can suffer for want of committed
defenders. The result is that the parts come to dominate the whole and even
define it in their own terms or image.
Sources:
David Kocieniewski, “G.E.’s
Strategies Let It Avoid Taxes Altogether,” The New York Times, March 24, 2011.
Bonnie Kavoussi, “General
Electric Avoids Taxes By Keeping $108 Billion Overseas,” The Huffington
Post, March 11, 2013.
