Posted on | April 15, 2011 |
It is hard to argue that our take home pay is being screwed over by the taxes taken out on our paychecks. With tax day approaching (on Monday) many households take another hit when they have to pay in at the end of the year. Ouch! But it is not as simple as income tax rates being too high.
Most rich people make their money on investments. Take John Paulson for example. $4.9 billion in income and at best he paid 15% because it is classified as a capital gain. Or he could have even paid no taxes on it. Yup, no taxes.
What the news media missed is that hedge-fund managers don’t even pay 15 percent. At least, not currently. So long as they leave their money, known as “carried interest,” in the hedge fund, their taxes are deferred. They only pay taxes when they cash out, which could be decades from now for younger managers. How do these hedge-fund managers get money in the meantime? By borrowing against the carried interest, often at absurdly low rates—currently about 2 percent.
That is a nice little loophole. But I digress a little bit. The vast majority of us make our money by working a typical 9-5 job and if we can we throw some money into a retirement account that Paulson’s friends run. Our wages are taxed at a higher rate. So first and foremost the rich are screwing you on your taxes. If the Paulson’s (and those like him) income was taxed as actual income he would pay 35% on anything above $350,000. I would have no problem paying just over a third to a country that allows me to make a great deal of wealth.
Last year alone the federal treasury lost out on over $7 billion dollars by not taxes the top 25 hedge fund managers in an equitable manner. Let’s continue.
In the good ole days of the 1940′s and 50′s corporations paid a lot more in taxes than they do now. General Electric didn’t pay any taxes for 2010. Now ask yourself how much you paid in this year. GE isn’t alone and this isn’t the first year for them either!
ExxonMobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
60 years ago:
Well, consider this: in the 1940s, corporations paid 43 percent of all the federal income taxes collected in this country. In the 1950s, they picked up the tab for 39 percent. But by the time the 1990s rolled around, corporations were paying just 18.9 percent of federal income taxes, and they forked over the same figure in the first decade of this century.
The difference is being made up on the state and local levels. That 99 cent candy bar costs $1.10 in Chicago once you are done at the cash register. You are picking up the difference elsewhere. In addition to the fact you are getting a helluva lot less in return the taxes paid in.
Nearly 50 cents per American goes to Boeing? Nearly $13 from every American has gone to General Electric? What the hell is that about? It is the corporate agenda at its best.
So you may think that is why you don’t want to pay your taxes or that your taxes are too damn high. I can completely understand the sentiment. But it is misplaced when directed solely at D.C.
Northwestern University political scientists Jeffrey Winter and Benjamin Page estimate, in a paper titled “Oligarchy in the United States?,” that “the top 10 percent of the population has about as much material-based political power as the entire bottom 90 percent.” And one important effect of this power has been a gradual shift of mainstream fiscal policy discourse toward policies favoring — surprise — the rich.
Our power as the bottom 90% has diminished over the course of a generation or two and been redirected towards the top 10%. Those with the power are going to get their way. We have to be angry at the power structure in this country.
We have such a quiet voice for such an enormous amount of people affected. What the middle class and working class should be advocating for is a more just economy. If the middle class and the working class’s wages increase – then so too does their buying power and the amount of taxes they pay in overall. It is a win-win for corporations (more disposable income) and for the federal government (more revenue).
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