America’s most generous welfare system is one in which the rich get richer, and the rest of us pay the bills.
Both Axios and American Progress have reported on the taxes paid–or more accurately, avoided– by members of the Fortune 500. This was at a time when corporate profits were more than healthy, and in the view of many, a time when corporate greed has contributed to the inflation that is eroding wage gains.
The table at the link shows 2021 federal income tax expenses, pre-tax earnings, and effective corporate income tax rates for 19 companies in the Fortune 100. Four of them show a negative tax rate, or zero taxes owed that year and for some, entitlement to a refund.
I’ve pared down the following list to the name of the corporation, its pre-tax earnings after allowable deductions and credits, and the effective tax rate. There are many more companies that fall into this category, but this will give you a (bitter) taste…
Amazon.com Inc.
$35.1 B
6.1%
Exxon Mobil Corp.
$9.3 B
2.8%
AT&T Inc.
$29.6 B
−4.1%
Microsoft Corp.
$33.7 B
9.7%
JPMorgan Chase & Co.
$48.2 B
5.9%
Verizon Communications
$27.2 B
6.9%
Ford Motor Co.
$10 B
1.0%
General Motors Co.
$9.4 B
0.2%
Chevron Corp.
$9.5 B
1.8%
Bank of America Corp.
$30.6 B
3.5%
United Parcel Service
$14 B
9.9%
FedEx Corp.
$4.7 B
4.2%
MetLife Inc.
$4.8 B
1.3%
Charter Communications Inc.
$6 B
−0.2%
Merck & Co. Inc.
$1.9 B
4.0%
American International Group Inc.
$9.8 B
−2.2%
Dow Inc.
$1.5 B
−3.1%
Nike Inc.
$5.6 B
5.9%
A recent Guardian analysis of top corporations’ earnings shows most of them are enjoying significant profit increases while they continue to pass higher costs on to customers. And despite record profits and minimal or even negative taxes generating big refunds, several of these companies–Amazon is notable–are frantically opposing the unionization of their workforces.
If you wonder why the gap between the rich and the rest continues to grow…
A recent article from Time Magazine traced the history and effect of unionization.
Unions became popular in the U.S. starting in the 1930s, with membership rising from just over 10% of the eligible working population in 1936 to about a third by the mid-1950s, according to 2021 research published in the Quarterly Journal of Economics. That remained the case until the mid-1980s, when they fell out of favor, thanks to a culture in which companies refocused on maximizing shareholder value and minimizing worker benefits, as well as a court-backed emphasis on the value of private property and private profit. “Those years turned out to be basically a blip in what otherwise has been not only a very contentious, but many times a very violent interaction between workers and employers in this country,” Devault says of the mid-20th century.
During unions’ heyday in the U.S., however, the income gap between the richest and poorest Americans shrunk considerably. “The only time that the bottom tenth of the population and the top tenth of the population have come closer together has been during those years, when unions were operating in the largest corporations in this country,” Devault says. As unionization declined in the 1970s and 80s, that income gap grew once more. Today, it is at an all-time high since tracking began over 50 years ago, based on Census Bureau data. Research shows that as much as $50 trillion has migrated into the coffers of the top 1% of income earners in the U.S., an upward redistribution of wealth that has squeezed out the middle class.
Business schools are finally recognizing that shareholders aren’t the only stakeholders who matter to the success of a business enterprise. Employee morale is ultimately as important to the bottom line as tax avoidance. For that matter, a prosperous middle class consisting of people with disposable income is critical to sustained business success.
America’s tax system is an abomination. You need not be anti-capitalist to insist that the rich pay their fair share to the country that provides them with the wherewithal to make those fortunes.
I’d be willing to bet that the “captains of industry” who manage those tax-avoiding businesses don’t resent paying the dues charged by fancy country clubs; they know it takes money to maintain glitzy clubhouses and immaculate golf courses. It also takes money to maintain the roads and bridges over which manufacturers ship their goods. It takes money to pay the police and firefighters who provide businesses with security and public safety, and it takes money to compensate the judges and other personnel who administer the legal system all businesses depend upon.
Etcetera.
During one of the 2016 Presidential debates, Trump responded to Hillary Clinton’s charge that he’d played fast and loose with his taxes by sneering that his tax avoidance meant he was smart. Too many executives agree with that sentiment, and they are all wrong.
The truth is, they are the “welfare queens” that they like to disparage.
https://www.visualcapitalist.com/charted-5-trillion-in-fossil-fuel-subsidies/#:~:text=However%2C%20after%20two%20years%20of,rise%20year%2Dover%2Dyear.
While the oil companies have DOUBLED their profits year to year, they continue to receive massive subsidies. That makes sense, Right ? I guess it does to Joe Manchin
The oligarchs have enjoyed decades of lavishing themselves at the expense of the working class in the USA. This mentality has been expanded into Britain as they’ve privatized many government services (neoliberalism).
Karma is a bitch.
The negative consequences are coming and coming hard. The strategy being employed in Ukraine will spill over into a European and USA economic slide. Germany has been hedging, but the German people will suffer once they reneged on their gas deal with Russia.
Pushing Russia further into the hands of China and BRIC will have a rippling effect not felt since WW2.
The oligarchy helped themselves to the treasury, but the backlash was coming. First, we’ll see how the people feel when they get walloped by a recession and rising prices while the oligarchy counts their bank accounts.
How bad will the social unrest get?
I would add Pam Martens to your daily newsletter list. Her journalism on the FED is attracting lots of attention and exposes our government and media as frauds:
https://wallstreetonparade.com
1) Enact laws to tax consumption at all levels (Value Added) and repeal or dramatically simplify the tax code to reduce rates on wages and capital gains and returns.
2) Reinstate the estate tax to include far more of them, but at a lower rate that doesn’t force the sale or dissolution of family-owned businesses. (It may cause its capital and debt to be restructured and this can be planned well in advance). Limit amounts that can be hidden in trusts and charitable foundations (Sorry Notre Dame…how many more $100m buildings do you NEED for 10,000 students anyway??).
Both would dramatically reduce the return on investment in tax avoidance. Millions of accountants and lawyers would have to find work that generates real value to society. So would US House Reps and Senators.
Unions are making their way back, big corporations and Wall Street has to remember how downturns in their market share is quicker with less qualified investors.
Berkshire Hathaway said due to inflation its gains are down 53% year to year.
“During one of the 2016 Presidential debates, Trump responded to Hillary Clinton’s charge that he’d played fast and loose with his taxes by sneering that his tax avoidance meant he was smart. Too many executives agree with that sentiment, and they are all wrong.”
But the single-person, Emperor, still wearing no clothes, is Donald Trump who continues to reign from his loss of election position of power. Just as a reminder, read:
https?//medium.com/@whitfieldlarrabee/like-father-like-son-the-troubling-problem-of-dementia-trumps-white-house-1ed5b7f232d2
“The business of business is to make money!” Today’s CEO class was brought up to believe that. They were hired because of their dedication to that principle. They are mouthing something different now, but they don’t really believe it yet.
Patrick writes, “Millions of accountants and lawyers would have to find work that generates real value to society. So would US House Reps and Senators.”
The professions Patrick highlighted are enablers along with media controlled by hedge funds/oligarchy. Enablers and conveyors of propaganda.
From what I’ve witnessed, and what Amazon employees have discovered and educated the general populace about, our union leaders are also captive pigeons of the oligarchy. The working class will have to organize outside the existing unions which are nothing more than departments of the Democratic Party.
Get ready though, Biden has already established a “ministry of propaganda” to prevent the people from being organized. However, the Biden administration calls it the “ministry of disinformation.”
Its name should be familiar to those who can read through bs like “right to work” and “right to farm” bills. 😉
In those ‘Good Ol’ Days’, we built the Interstate Highway System, went into space and then to the Moon. We had the Marshall Plan to rebuild Europe with after WWII, and we increased our military in both protections and wars during the Cold War.
And none of those things and lots of other progressive programs broke the financial system because the rich and big business were taxed. They knew the economy would grow and they’d get their ‘tax investments’ back in the form of profits, so they paid the bill and only complained for form’s sake.
Then, another economic revolution came on stream, mostly because new technologies developed and went into business knowing the economy would continue to grow.
Now, we are going through another Gilded Age where anti-trust laws are flouted, the rich are piling up the cash and taking it out of circulation because they don’t actually want it to trickle down to those who have made them their money.
And what sealed this into the mentality of the poor so they would go for it? When a President said, and then proved, so far, that deficits don’t really matter.
And, around & ’round we go and where it stops? Does anyone know?
Our corporations are lightly taxed, yet Congress insists the rate for student loans be set at market rates, and argues against student loan forgiveness.
You can’t be an informed liberal and not be a huge fan of liberal democracy which is the basis for the US Constitution. However thanks to Republican shenanigans, it’s no longer what we have here. That’s largely because it requires a well informed electorate and, again, largely Republicans, have found out how to use absolutely pervasive entertainment media to misinform the electorate. That started way back in Reagan days when he told his fans that the government only creates problems implying quite obviously and effectively that it must be only non-government that solves all of our problems.
His message is quite clear and compelling to those who ignore the dangers of weak government:
defund government.
did intel get their 52 billion? for a ohio kickstart? like they need money.. seems the investor is the supreme receiver of the profits,and,well, they also want to use other peoples money,ours,every taxpayers,oh,forgot,they the investor,does not want to pay taxes,so they hired a whole party on capital hill to see they dont. along with the list today of welfare grants to these companies who employ many,and few see a guarantee of a long job security or living wage with benefits that somehow dont take money out of the workers pockets. if these companies can pay a quarterly dividend to people who dont raise a finger in the manpower to make the profit,then that profit should be returned to the worker who does the work..labor laws now have changed where in some situations the company can and many times will, have the worker sign agreements where they have deductions from pay or lose of benefits. my wife lost 4 years of 401K because she quit after another employee screamed at her while she was doing her job,this employee was having a bad day, and management did nothing to intervine,because they all work for a corp many states away. my wife was the hardest working person their with pay raises every quarter. the fund, who,implemented (principal)the 401K allowed this in contract,she recieved less than 60% of the gross of that fund. again, corp.welfare or just labor or buisness mongering is way beyond what we had prior to reagan. if the investor whines and cries over the changes in the economy,netflicks etc. then maybe those promises or the fine print on the bottom line doesnt apply to them. investor: the one who invests in the company,the U.S. taxpayer should not be the investment circle of corp Americas greed capitalism, when money is available in the investors funds. too many jamie diamon scams keep us,the worker always next to uncertainly and poverty. theres plenty of money given away every quarter to support a working class with a living wage. this isnt a Bernie matter, its a moral issue on who does the work. if labor unions have a chance at gaining ground,its because of the way its been over the last 40 years. unions are beyond representing just its members,its a whole picture of watching corp profits and demanding more for its labor force. when reagan gutted the unions with cheap rhetoric and lies, we the non union worker, lost much more. we lost a pay scale the unions provided to its members. i used this for years living in the big cities. when i looked for work, i knew the union job paid X, i knew non union paid less, but my field isnt a top tier enterprise. i took 10/20% less, but,i had a bargaining hand. the republicans can say all they want about being labor or family friendly, its all trivial BS..though many demos needed to,pass,their agendas, they often tossed our needs like the above for their pets.
dont ever recommend trucking as a job,its a total lose profession unless you find a small employer who honors the job. investor owned trucking companies such as u.s.express and swift and england and the lot.could care less about you and your needs. the best con artists of all times are the ones who recruit for them, many of them.contactors by head..
Brutal capitalism for the poor and middle class and socialism for the rich and corporate class. Thus income tax disparity is only one (albeit a big one) of the subsidies we give to “big business.” Take, for instance, real property taxes which pay for public education. You and I pay to educate the workforce of the rich and corporate class K through 12 and then those who go to college borrow money from (who else?) big business to continue their education. But, says big business, we provide jobs, though with right to work handcuffs and the Wagner Act a distant memory, big business profits from the underpayment of such labor, and in Keynesian theory it is aggregate demand in any event that provides jobs and not big business, which is a mere overpaid marketing facilitator for goods and services.
Somehow these capitalist socialists (not a typo) have persuaded us via their ownership of the media and the political culture that anyone who opposes the present system is “against business” or “socialists” or “communists” or against “democracy,” though I note that these capitalist socialists have little to say about the 1/6 attempt to end our democracy by political terrorists, perhaps because they recognize that had that operation been successful their definition of democracy would be next on the chopping block as the terrorists consolidated their gains in going after any other potential challenges to their dictatorship.
So what to do? What I have been advocating for many moons – Do a complete overhaul of the Internal Revenue Code and do it with government help rather than the current system of having corporate counsel write its many amendments, have lobbyists hand them to politicians to enact (along with generous, uh, “campaign contributions” and a list of talking points), and set their propaganda mill (WSJ, Fox et al) in motion.
The use of the phrase “welfare queen” by the rich and corporate class and bandied about by Reagan is a classic case of projection since, as Sheila suggests, THEY are the welfare queens.