Majority Leader Eric Cantor said Thursday that the Republican-dominated House simply won’t support tax increases and that he won’t be participating in a meeting scheduled for Thursday. Mr. Cantor said that it’s time for President Barack Obama to weigh in directly on the budget because Democrats insist on negotiating some tax increases.
Crafty Cantor implies that it is the ordinary citizen the Republican Party is protecting against tax increases, when it is really big business and the massive government subsidies to big businesses the Republican Party is protecting.
Cutting roughly four billion dollars a year in oil and gas sector subsidies would be a good start, so too is tightening manufacturing deductions that are used well beyond the sector.
How about overseas tax shelters? Ones like those that help GE, which earned a $14 billion profit in 2010, pay ZERO taxes.
Under current rules US firms pay tax on foreign subsidiaries only when profits are sent back to the United States.
Treating subsidiaries as domestic businesses for tax purposes could spell vastly higher tax bills for firms like GE.
While the company says much of this year’s tax savings come from losses at GE Capital, even before other write-offs its effective US tax rate was just over seven percent — thanks in part to some profits being kept overseas.
So even if the ‘other write-offs’ were eliminated GE would still only pay just over 7% in taxes.
Republicans argue that big business already has big taxes. Well, yes and no. “If you just look at our statutory rate, it’s high,” said Annette Nellen, an accounting professor at San Jose State University, but “the effective tax rate for many companies is a lot lower.”
In cases like GE, that rate is ZERO!
In 2008 the Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.
During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens. Carl Levin of Michigan and Byron Dorgan of North Dakota, who requested the GAO study.
The report did not name any companies. The GAO said corporations escaped paying federal income taxes for a variety of reasons including operating losses, tax credits and an ability to use transactions within the company to shift income to low tax countries.
The Republican Party should stop supporting massive tax breaks and subsidies for big businesses and start working towards a fair and balance tax system for everyone.