Monday, October 24, 2011

The Cost-of-Living Keeps Us Unemployed

It's not corporate taxes that keeps American corporations from hiring domestic workers, it's our cost for housing, and the wages we need to earn to meet that cost, that's what puts us where we are today. If corporations didn't have to pay any corporate taxes at all, it would still be cheaper for them to pay Chinese factory workers $1 an hour (with no overtime wages) and paying the Chinese corporate tax rate of 25% (with no tax loopholes) than it would to pay workers in America.

Hypothetically speaking, if housing were cheaper in the United States, if monthly rents or mortgages only cost us $100 a month (and bread was 5¢ a loaf), theoretically Americans could also afford to work for $1 an hour. Our greatest single expense is not for food, heat, or transportation, but for a roof over our head.

Add to that, Congress permits corporations to get away without paying taxes – they caused it to happen by passing a series of loopholes and gimmicks for multi-national corporations that allow them to shelter profits in overseas business entities.

According to the non-partisan Government Accountability Office (GAO), eighty-three of the 100 largest publicly traded U.S. corporations utilize such tax havens to reduce their U.S. tax liability. Ironically, these accounting tricks aren’t available for companies that only do business in the United States, so Congress in effect is providing tax incentives to ship jobs overseas and dismantle the middle class.

Under JFK, the GDP expanded by an average of 5.5% and industrial production rose by 15% (and has yet to be repeated for such a sustained period of time) when the corporate tax rate was 52%, and while the average annual unemployment rate went down from 6.69% in 1961 to 5.57% in 1962. In early 1963 inflation was stable, corporate profits were at a record high, and the stock market had rebounded, while unemployment was low.

By comparison, between January 1948 and January 2010, the highest unemployment rate was 10.8% in November and December of 1982 under Ronald Reagan.

But it was Bill Clinton's two terms in office (1993-2001) that marked the strongest numbers for gross domestic product (GDP) and employment growth -- and especially for deficit reduction. Clinton's overall ranking puts him first among the ten postwar presidents--ahead of Lyndon B. Johnson, John Kennedy and Ronald Reagan.

But since George W. Bush, even WITH the tax breaks for corporations (and their CEOs), 40,000 factories and millions of jobs have left our shores. Currently these multi-national corporations have $2 trillion in un-taxed off-shore accounts from profits earned overseas. More tax breaks (or no taxes at all) will only allow them to hoard $3 or $4 trillion in un-taxed off-shore accounts from profits earned overseas...because the wages we need to earn domestically to pay for housing still far exceeds what the multi-nationals can pay someone to work in China. Read: America's Race to the Bottom.

And what is the different between the interest a bank charges us and the tax we want to charge the banks?

It would be nice to not tax the banks, multi-national corporations, CEOs, mansions, private jets, limousines, yachts, private islands, and executive bonuses...but without taxes, we can't run our federal, state, and city governments either. Who would take away the garbage, teach the kids, police the streets, put out the fires, and fix the potholes? Would the corporations use that $2 trillion in un-taxed off-shore bank accounts from profits earned overseas to pay for these things? Not unless we taxed them.

How a Dozen Multinational Corporations Spent a Billion Dollars on Lobbying and Campaign Contributions and Avoided Paying Taxes

10 Big Businesses That Have Moved Their Headquarters Abroad to Pay Less U.S. Taxes

1 comment:

  1. The Obama administration is introducing a new program on Monday designed to lower monthly mortgage payments for more troubled homeowners. But a key new condition in the plan would shift the financial liability for refinanced loans from Wall Street banks to the American taxpayer.

    And by focusing on lower payments, the program does not confront what housing experts view as the core problem in the foreclosure crisis -- borrower debt that exceeds the value of one's home.

    Faced with the weak response to the Home Affordable Refinance Program, the Obama administration is planning to open up the program to all borrowers who owe more on their mortgage than their homes' worth, commonly dubbed being underwater, and have not missed a mortgage payment.

    The newly expanded program would expunge legal liabilities associated with mortgages refinanced through the program for the original lenders of the mortgages. Each time a bank sent a loan to Fannie and Freddie, it certified that the loan met Fannie and Freddie's safe lending criteria. But many loans sent to the mortgage giants did not, in fact, meet those criteria. Currently, when borrowers default on those ineligible loans, the mortgage giants can "put back" the resulting losses onto the banks that pushed the loans