Category Archives: Tax code

Huckabee’s “Fair Tax” Anything But

Huckabee Climbs On the Fair Tax Train Again

Citizens for Tax Justice has a piece today on GOP candidate Mike Huckabee’s “Fair tax”:

huckabee hawks fair tax planFor years, Huckabee has been one of the main proponents of the “Fair Tax plan’, which would replace all federal taxes with a national sales tax. Citizens for Tax Justice and the congressional Joint Committee on Taxation have each found that to raise the same amount of revenue as current law, the sales tax rate would have to be about 50 percent.

A study by the Institute on Taxation and Economic Policy (ITEP) found that under the “Fair Tax,” the top 1 percent of taxpayers would receive an average annual tax cut of $225,000. Meanwhile, the plan would increase taxes by about $3,200 on average on the bottom 80 percent of taxpayers. In other words, Huckabee’s tax plan would significantly increase taxes on the overwhelming majority of Americans to pay for huge tax cuts for the very wealthiest Americans.

A Fair Tax For Those Poor Corporate Tax Cheats

The idea of a national sales tax is ludicrous at best. States would pile on with their own sales taxes in lieu of state taxes, something GOP Governors are already doing. Sales taxes will always take a larger share of earnings from lower income individuals. In an interview with the Daily Beast, Huckabee claimed:

“A tax is punishment. Why punish a company for making money?  If there were no taxes on what we earn, imagine the trillions of capital that would flow here from around the world.”

Now nobody likes taxes, but most thinking people understand why we need them. Our existence as a country has to be funded somehow. When Conservatives start talking about a “fair tax”,remember whose corner they’re in. Trust me, it’s not the little guy’s. When politicians start claiming business taxes are unfair, it should bring laughter, not pity. Some of the biggest tax cheats in this country are our larger corporations.

tax havensI’ve written several articles for All Things Democrat about the un-American off-shoring of corporate profits, with many paying no taxes at all. Huckabee’s description of taxes as punishment against businesses means one of two things: He is either too ignorant or too dishonest to be President. This is a guy who hawks cinnamon as a cure for diabetes, so that tells you what you need to know. The Daily Beast writes:

In Huckabee’s view, tax reform should not harm the middle class or undermine the family.

Yet, that is precisely what the “Fair Tax” does. In 2007, Fact Check took Huckabee and others to task for their promotion of the Fair Tax plan:

We found that while there are several good economic arguments for the FairTax, unless you earn more than $200,000 per year, fairness is not one of them.

Way back in 1998, the Brookings Institute published a research paper which explains that the alleged fairness of the “fair tax plan” is subject to its’ implementation. Regardless of form, it will still be the wealthiest that benefit:

Advocates praise the simplicity, the potential for economic growth, the enforceability, and the fairness of a tax system based on consumption. But when examined closely, the simplicity breaks down, payments would be close to impossible to collect, and the tax’s fairness would be, at best, questionable.

(…)

rich guyIf households are classified by annual income, the sales tax is sharply regressive. Under the AFT proposal, taxes would rise for households in the bottom 90 percent of the income distribution, while households in the top 1 percent would receive an average tax cut of over $75,000. If households are classified by consumption level, a somewhat different pattern emerges. Households in the bottom two-thirds of the distribution would pay less than currently, households in the top third would pay more. Still, households at the very top would pay much less, again receiving a tax cut of about $75,000.

Republicans Screwing Their Own as Usual

 

The problem I have with this tax plan is simple: The only costs that matter here are those of necessities. It’s apples and oranges when one considers the purchasing of staples as opposed to that second home, or a yacht. The question becomes that of subsistence vs. a thriving society.

Those who will come out on the short end of this deal will largely be Republicans’ own constituents. The people who already bear the most hardship from their party’s policies.

Leave a Comment

Filed under 2016 Campaigns, Mike Huckabee, Politics, Tax code, Taxes

Will Offshore Blackmailers Win Again?

Congress might be poised to kowtow to corporate offshore blackmailers again, according to Reuters News Service:

corporate gift from congressDemocrat Barbara Boxer of California and Republican Rand Paul of Kentucky called for allowing businesses to pay 6.5 percent corporate income tax on foreign profits brought into the country from overseas, instead of the current 35 percent rate, which they largely avoid.

Seriously, this offshore tax holiday bullshit again? Do we learn nothing from past mistakes? As the Center for Budget and Policy Priorities reports:

A tax holiday enacted in 2004 failed to produce the promised economic benefits. The evidence shows that firms mostly used the repatriated earnings not to invest in U.S. jobs or growth but for purposes that Congress sought to prohibit, such as repurchasing their own stock and paying bigger dividends to their shareholders. Moreover, many firms actually laid off large numbers of U.S. workers even as they reaped multi-billion-dollar benefits from the tax holiday and passed them on to shareholders.

Americans for Tax Fairness reports:

Multinational corporations are holding roughly $2 trillion in profits offshore – much of it in tax havens to avoid paying U.S. taxes. These corporations are costing U.S. taxpayers about $100 billion every year in lost revenue.

When corporations don’t pay their fair share of taxes, the rest of us must make up the difference. Here’s how much a handful of these corporations would likely owe in taxes if they brought those profits home:

  • Apple: $26 billion
  • Microsoft: $19.4 billiontax dodging
  • Amgen: $7.9 billion
  • Eli Lilly: $7.3 billion
  • Oracle: $6.3 billion
  • Dell: $6.2 billion

Now consider this: In a 2013 Senate subcommittee hearing, Apple CEO Tim Cook claimed: “We pay all the taxes we owe, every single dollar.” As Forbes reported at the time:

Apple, one of the world’s most valuable companies, was asked to testify about its tax programs as part of the subcommittee’s ongoing look into corporate tax loopholes.

The bi-partisan committee, headed by Carl Levin (D-Mich.) and John McCain (R-Ariz.), said its investigation found that Apple has shifted billions of dollars in profits away from the U.S. and into Ireland, where the maker of iPhones and iPads has negotiated a special corporate tax rate of 2 percent or less. The subcomittee said yesterday that Apple has avoided paying taxes on $44 billion in overseas earnings that should have been taxed in the U.S. over the past four years.

offshore_tax_rulesWhile Apple paid almost $6 billion in taxes last year, the company also shifted $36 billion in taxable earnings away from the U.S. in 2012 and avoided a payment of $9 billion, Levin said. That translates into avoiding $1 million an hour in taxes, or $25 million a day, he said. “Apple wants to focus on the billions in taxes it has paid. But the real issue is the billions in taxes it has not paid.”

In a rather humorous/ironic twist, Senator Rand Paul, one of those calling for this latest get-out-of-jail-free-card for tax dodgers:

accused his colleagues of trying to “vilify” Apple. Paul said the committee should “apologize” for forcing Apple to sit through a “show trial” and for having to cope with “a bizarre and Byzantine tax code.” “Money goes where it’s welcome,” Paul said, calling for comprehensive U.S. tax reform. “Frankly, I’m offended by the tone and tenor of this hearing…I’m offended by a $4 trillion government bullying, berating and badgering one of America’s greatest success stories.” (emphasis mine)

Poor little multimillionaire; I sympathize, don’t you?

There is a tax myth repeated ad nauseum by the Right and their “think tanks” like the Heritage Foundation that claims U.S. corporations pay the highest tax rates in the world. This myth has been debunked numerous times, and yet it remains a mantra on the Right. The corporate tax rate is supposedly 35% on U.S. profits; but, as Citizens for Tax Justice pointed out in their report The Sorry State of Corporate Taxes:

The report looks at the profits and U.S. federal income taxes of the 288 Fortune 500 companies that have been consistently profitable in each of the five years between 2008 and 2012, excluding companies that experienced even one unprofitable year during this period.

Some Key Findings:

• As a group, the 288 corporations examined paid an effective federal income tax rate of just 19.4 percent over the five-year period — far less than the statutory 35 percent tax rate.

• Twenty-six of the corporations, including Boeing, General Electric, Priceline.com and Verizon, paid no federal income tax at all over the five year period. A third of the corporations (93) paid an effective tax rate of less than ten percent over that period.

• Of those corporations in our sample with significant offshore profits, two thirds paid higher corporate tax rates to foreign governments where they operate than they paid in the U.S. on their U.S. profits.

This is a breakdown of U.S. tax revenue for 2013:

chart u.s. tax revenue 2013

In 2013, federal corporate income tax revenue was approximately $273.5 billion; at the same time corporate after-tax profits hit $1.68 trillion.

Now, I agree the tax system is a mess, so let’s fix it; lower the corporate tax rate, but eliminate all tax write-offs. Americans shouldn’t have to subsidize a company’s R&D, corporate jets, re-investment, etc.; if “they built that” then they can pay for their own costs of doing business. And stop letting billion dollar corporations call themselves small businesses, it’s an insult to true small business.

Let’s simplify the individual income tax while we’re at it, and stop allowing the wealthy to pay less taxes for doing nothing than those who actually work.

But most of all, let’s stop allowing big corporations and the rich to shirk their responsibilities, then blackmail America to get out of paying what they owe.

crossposted @ All Things Democrat

Leave a Comment

Filed under Barbara Boxer, Corporate Greed, off shore banking, Politics, Rand Paul, Tax Cheats, Tax code