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Naming corporate theft for what it is

A despoiling of the nation’s resources is underway. Not environmental resources, but taxpayers’ financial resources. Corporate interests, while a key player in the raid on taxpayers’ money, have been largely immune from scrutiny because they regularly buy up House and Senate votes.

Meanwhile, the raid on the public treasury is legal and ongoing. Citizens for Tax Justice found last month that Enron paid no corporate income taxes in four of the past five years, although the company was profitable in each of those years. Over the five-year period from 1996 to 2000, Enron received a whopping net tax rebate of $381 million. This includes a $278 million tax rebate in 2000 alone. Over the same period, the company’s profit before federal income taxes totaled $1.785 billion. In none of these years was the company’s pretax profit less than $87 million.

According to Citizens for Tax Justice, at the 35 percent tax rate, Enron’s tax on profits in the past five years would have been $625 million, but the company was able to use tax benefits from stock options and other loopholes to reduce its five-year tax total to substantially less than zero. Among the loopholes used to reduce the company’s tax liability was the creation of more than 800 subsidiaries in “tax havens” such as the Cayman Islands.

Nice if you can have it.

But don’t lose the wider picture. Many of the country’s biggest corporations are once again paying little or nothing in federal income taxes, according to a study released by the Institute on Taxation and Economic Policy, which collaborated on a number of widely-publicized analyses of corporate taxes in the 1980s.

The institute’s report examines the U.S. profits and federal income taxes of 250 of the nation’s largest and most profitable corporations over the 1996-98 period. Although big corporations ostensibly are supposed to pay 35 percent of their profits in taxes, the 250 companies in the Institute’s survey paid only 20.1 percent in 1998.

That was down from 22.9 percent in 1996, and far below the 26.5 percent that a similar group of large companies paid back in 1988, soon after passage of the 1986 Tax Reform Act, intended to close loopholes.

Even as Enron flashes across the front pages of our newspapers, the inner elite is at work to fatten their accounts at the expense of the rest of us. The House last month passed its latest “stimulus” plan, a $218 billion proposal once again largely made up of business tax cuts for the wealthiest Americans. This is patriotism?

Curiously, while the legislation is called a “stimulus” package, aimed at breaking the back of the current recession, most of the tax breaks will accrue to the wealthy elite years after the recession is history.

The latest so-called “compromise” package of corporate tax subsidies and upper-income tax reductions put forward last December by House Republicans with President Bush’s approval is almost identical to the tax cut bill passed by the House in October. The Senate has not yet taken up the measure.

It is instructive to look at some of the money behind the legislators responsible for these new measures. Here’s how the corporations bought Congress during the 1999-2000 campaign:

  • Finance and insurance sectors contributed nearly $300 million to congressional campaigns.
  • Communications and electronics contributed $131 million. (IBM, which would have received a $1.4 billion tax rebate under the original House bill, contributed nearly $300,000 in individual donations.)
  • General Motors, which would have received a $833 million rebate, gave $867,000 in individual, PAC and soft money contributions.
  • General Electric, which would have received a $671 million tax rebate, gave $1.9 million in individual, PAC and soft money contributions.

The original House bill had an estimated cost of $212 billion over its first three years. The new bill’s tax cuts appear to have a three-year price tag of about $202 billion -- only five percent less.

Over the first three years, 69 percent of the tax cuts in the original bill would have gone to corporations. Under the new bill, corporations would get about 63 percent of all the tax breaks.

The new House bill scales back an even more egregious measure proposed last October that completely repealed the corporate alternative minimum tax. That repeal would have refunded $25 billion to America’s top corporations that they had paid over the last 15 years! (Under the new plan, the corporations will receive a paltry $13 billion of relief over the next 10 years.)

What are we looking at? Theft legitimized is no less theft to those whose money has been taken; and it’s always the taxpayers’ money. Someone must pay. When corporate America opts out, social benefits fall or individual taxpayers make up the difference.

The same flacks for the corporate fortunate who put about the “no government” mantra also use that same government to thwart the common good and sock it to the taxpayers.

In America, nothing succeeds like success. But then, wickedness, when profitable and successful, has been a virtue since the days of the Roman Senate.

The trouble is, no one really wants to label the corruption of the U.S. government by corporate America for what it is: wicked.

National Catholic Reporter, February 8, 2002