The most important speech of the week was not delivered by President Obama or the Republican candidates seeking to succeed him during their back and forth over the recent terror attack in Paris. It was not delivered by Sec. Clinton during her major foreign policy speech or Sen. Sanders speech explaining his political philosophy. No, as important as these remarks were, they were overshadowed by the speech, ironically little covered by the media given it was made at the National Press Club, by Sen. Elizabeth Warren.
On the surface this speech would not appear to hold great import. On one level It was a policy wonk analysis of revision of the corporate tax code and one of the many tax dodges that Multi-national corporations employ to pad their bottom line-- storing profits with overseas subsidiaries in tax havens to the tune of $2.1 trillion--that’s trillion with a T. But, dig a little deeper, and the reality of why 90% of us who are not wealthy are working harder and not getting ahead and in many cases falling behind, is exposed.
Currently, according to Sen. Warren, there is a full court press underway in the halls of Congress by multinational corporations led by CEO’s and their army of lawyers and lobbyists. Their sales pitch or “elevator pitch” as she says: U.S corporate tax rates are too high, leaving American employers at an competitive disadvantage in the world market place. They want to lower the corporate tax rate and lower the tax rate on money repatriated to the U.S. Treasury from the offshore tax havens. Warren says don’t fall for this falsehood. Nominal corporate tax rates are 35%, but few pay this rate. The effective tax rate after deductions, exceptions and credits, is 20% for large corporations-- in line with other national corporate tax rates. And the tax rate for the profits tax dodgers store in the tax havens— 3%. The problem is not that corporate tax rates are too high, according to Warren. It’s that revenue generated by corporate taxes is too low. And as the corporate tax contribution to government revenues has fallen over the past 60 years ( from 30% of total revenue of the government to 10% today) we are left to make up the difference either in terms of more taxes on us or less services provided.
To my ears, the most remarkable nugget of information that Sen. Warren provided was that from the mid 1930’s to 1980, as GDP went up so did median income. During this time, the bottom 90% of income earners received 70% of all income growth. But, from 1980 until 2012, the most recent year of data, the bottom 90% received ZERO % of income growth. Of course, this coincided with the trickle down theory of economics that took the regulatory cop off the corporate beat and cut taxes on the top income earners. This reduced money available to fund education, infrastructure and basic research that had helped build the middle class.
The sales pitch based on falsehoods is being parroted on the presidential campaign by Republican candidates. You will even find talk among some Democrats in Congress and the White House who agree with it. I suspect that your local media will soon have stories reflecting the CEO sales pitch. There are deep pockets to fund the tax dodgers PR campaign that is to come.
You have heard and will continue to hear establishment Republicans, Democrats and their corporate sponsors criticize proposals from candidates which seek to rebuild the middle class. The Democratic establishment hints these proposals will lead to our taxes rising hoping to kill these proposals in the crib, conveniently ignoring any cost savings or benefits they will bring. The Republican and Corporate establishment will tell you to watch your wallet because Democrats are coming for it, conveniently ignoring that Wall Street has come for many of our jobs and homes.
There are even commenters here at Dkos who mock criticism of Wall Street and its greed in Tarzan like diction, Wall Street Evil, Money Bad! No, I don’t believe Wall Street is evil. It’s just that they are acting in their own self interests which are in conflict with mine. They seek to maximize shareholder value at the expense of their employees, customers and community. It wasn’t always so. Today though, corporations use their economic power to influence the political process which writes the rules which enhances their economic power at the expense of the rest of us. The tax dodgers are but one example of this. This cycle needs to be broken.
Below is the link to the speech. Don’t ignore the Q&A portion at the end. I also included the tax fairness charts which help source some of Sen. Warren’s claims she makes in her remarks.
www.huffingtonpost.com/…
www.americansfortaxfairness.org/…
Other Nuggets From The Speech:
1.) Over a recent 5 year period Boeing, GE and Verizon cumulatively made 80 Billion in profits and paid ZERO federal corporate income tax income. Additionally, they received tax rebates!
2. ¾ of the Fortune 500 companies had offshore tax haven subsidiaries according to Sec filings.
3.) 358 of the Fortune 500 companies had a total of 7,622 Tax Haven Subsidiaries.
4.) TPP negotiators consulted ,”cleared advisors”, i.e. people who had the ear, met and talked with the negotiators to help shape the trade deal. 85% of these cleared advisors were corporate CEO’S or lobbyists.
5.) Sen. Warren: ”I’m concerned about everybody’s ties to Wall Street.”
6.) Following the crash of the Great Recession, Wall Street spent over 1 million dollars a day for over a year to lobby against reform. Reform that was a response to the excesses that led and fed the crash and they haven’t let up.
