Monday, January 06, 2014

Is Federal Tax Avoidance the Biggest Threat to Social Security in the U.S./

Post-xmas blues?  Don't get depressed: get angry. Start by reading this article by Paul Buchheit about the ways in which corporate America deprives citizens of their pensions and social security.  The sums involved, according to Buchheit, are astonishing:
For every dollar they paid relative to payroll tax in the 1950s, they (companies) now pay ten cents. In just the past ten years they've cut their tax rate in half. The sum total of tax underpayments, tax haven losses, corporate tax avoidance, and tax expenditures (most of which benefit the very rich) is over $2 trillion. Although Social Security costs less than half of that, Congress is targeting Americans who have paid into it at the highest rate, while tax avoiders are left undisturbed.
And it doesn't stop with tax avoidance.  Increasingly scared of the potential reputation damage caused by avoiding taxes, companies have switched their focus to lobbying harder for tax breaks, subsidies and (their ultimate goal) abolition of the corporate income tax.  Tax "competition" is completely out of control, yet politicians scramble to accelerate this race-to-the-bottom.  According to Buchheit:
On the pretense that their presence enriches the people of their home states, and that subsidy-green pastures lie right across the border, companies have cunningly negotiated tax-cutting deals in return for the promise to stay. A Good Jobs First report describes the process, which costs state and local governments up to $80 billion a year.
Dozens of deals have been contrived, at least ten each in Michigan, New York, Ohio, Texas, Louisiana, Tennessee, Alabama, Kentucky, and New Jersey. Sixteen states have enacted the Private Income Tax (PIT) diversion, by which EMPLOYERS rather than governments get to withhold state income taxes from employee paychecks and to keep all or some portion of the funds.
Illinois' pension mess has its roots in corporate threats to bolt the state: $100 million to Motorola; $150 million to Sears; $56 million to Boeing to bring its headquarters to Chicago; and nearly $200 million to Caterpillar, which paid only 2 percent of its U.S. income in state taxes in 2011-12, and whose CEO called Illinois "unfriendly to business."
This phenomenom is not peculiar to the U.S.  Similar processes are underway in Europe, and the situation in other parts of the world is arguably worse.

Like we said: don't get depressed, get angry. Take action by pressing your political leaders to abandon this insane competition in corporate subsidy.


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