Rep. Tipton and Sen. Sanders offer choice on corporate tax policy
Colorado’s 3rd Congressional District Rep. Scott Tipton and Vermont Sen. Bernie Sanders are offering competing legislation to bring corporate taxes under control.
The news that General Electric, along with a number of other multi-nationals, paid no taxes last year broke in The New York Times just as Tipton introduced his bill in the House to reduce corporate taxes to 10 percent.
I hope that the irony will not be lost on Tipton’s hard-working 3rd District constituents who are struggling to fill out their own tax returns and, like good citizens, pay their fair share.
As Sanders said, “It is grossly unfair for congressional Republicans to propose major cuts to Head Start, Pell Grants, the Social Security Administration, nutrition grants for low-income women and the Environmental Protection Agency while ignoring the reality that some of the most profitable corporations pay nothing or almost nothing in federal taxes.”
To illustrate his point, Sanders released a list of the top 10 most egregious corporate tax avoiders. Most of them not only paid no taxes, but received tax “rebates.” These refunds range from hundreds of millions of dollars up to G.E.‘s $4.1 billion refund over the last five years. G.E.‘s profit — on which they paid no taxes — during those years was $26 billion.
“In a rational system, a corporation’s tax department would be there to see they complied with the law,” said Len Burman of the non-partisan Tax Policy Center. “But in our system, there are corporations that view their tax departments as a profit center and the effects on public policy can be negative.”
Tipton credits Ronald Reagan’s tax policies for the inspiration behind his bill. But, as The New York Times reports, in the mid-1980s, “President Ronald Reagan overhauled the tax system after learning that G.E. … was among corporations using accounting gamesmanship to avoid paying taxes.”
“I hadn’t realized things had gotten that far out of hand,” Reagan told his Treasury secretary.
Reagan supported changing tax laws and closing loopholes to return G.E.‘s effective tax rate to 32.5 percent.
Since the Reagan reforms, however, things have gotten out of hand again.
Since the late 1990s, changes in tax laws and new loopholes, including exempting offshore profits from American taxes, and expanded and very aggressive tax evasion programs, have ushered in a new era of corporate tax avoidance.
As Robert S. McIntyre, director of Citizens for Tax Justice said, “Cracking down on offshore profit-shifting by financial companies like G.E. was one of the important achievements of President Reagan’s 1986 Tax Reform act. The fact that Congress was snookered into undermining that reform at the behest of companies like G.E. is an insult not just to Reagan, but to all the ordinary American taxpayers who have to foot the bill for G.E.‘s rampant tax sheltering.”
G.E. and other corporations have been very successful lobbying for, and taking advantage of, tax laws written for their benefit. The effect has been reduction of corporate taxes from 30 percent of all federal revenue in the 1950s to 6.6 percent in 2009.
Reagan did not reward the most profitable corporations in the country for their skill at tax evasion. His conservative values required everyone to pay their fair share.
Sanders calls that “shared sacrifice.”
“We have a deficit problem. It has to be addressed,” he says, but not “on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We’ve got to talk about shared sacrifice.”
Unlike Tipton’s bill, giving corporations an easier ride on taxes, Sanders plans to introduce Senate legislation to make sure “the wealthiest Americans and the most profitable corporations … do their share to help bring down our deficit.”
Sanders has introduced legislation to close corporate tax loopholes and eliminate tax breaks for oil and gas companies.
His bill would also impose a 5.4 percent surtax on millionaires to help make sure “the federal budget is not balanced solely on the backs of working families.”
Scott Tipton’s proposed legislation will only exacerbate the problem by reducing corporate taxes even further — meaning even larger “rebates” of taxpayer dollars to those large tax aversive companies.
The choice is clear. Tipton and tax breaks for big corporations, or Sanders’ plan for more equitable sharing of the tax burden.
The choice should be easy.
Bill Grant lives in Grand Junction. He can be reached at william.grant99@ gmail.com.