President Barack Obama, flanked by Paul Volcker and Jeffrey Immelt. Image via Wikipedia
To say that America is on an unsustainable fiscal path is to overstate the obvious.
If the writers at The Big Picture blog are right, then America’s fiscal house will soon collapse as the percentage of income for the federal treasury coming from corporations has shrunk precipitously from 1955 to 2010, while the burden carried by individuals has increased greatly.
According to statistics, in 2010 81.5 percent of federal revenues came from individual income, up from 58 percent in 1955. During the same period, corporate taxes as a percentage of federal income fell from 27.3 percent to 8.9 percent. If true, then the Democrats are right: America’s corporations are paying less and less of a percentage of their income in taxes.
Given that fewer and fewer Americans are employed today because of the economic policies of the Obama regime, the amount of income to the federal treasury is also in sharp decline. Combine this with the fact that nearly half of all individual taxpayers in America paid no federal taxes on their income last year and it’s painfully obvious that America cannot sustain this sort of tax policy where a very small percentage of individual taxpayers are left to carry most of the weight while corporate cronyism runs rampant.
The Sunlight Foundation reported that while GE avoided paying any corporate income tax in the United States last year on $5.1 billion in U.S. income ($14.2 billion globally), Goldman Sachs paid $14 million in taxes last year, according to The Big Picture blog. Even more disgusting was the fact reported that GE actually received a tax refund from the federal government to the tune of $3.2 billion. Those are better-than-Vegas odds if you ask me!
How GE managed to become the president’s favorite pet is beyond me, but the fact that GE CEO Jeffrey Immelt moonlights in the Obama regime hasn’t been lost on everyday America. So where are the Senate hearings? Meanwhile, Immelt is out lecturing American businesses, telling them to just hire more people, as if his Nike ad — “Just Do It” — approach will help small business pay the bills.
I’m out talking about this company seven days a week, 24 hours a day, with nothing to hide. We’re a 130 year old company that has a great record of high quality leadership, and a culture of integrity — Jeffrey R. Immelt, chairman and CEO of General Electric
Does that “culture of integrity” include stiffing the federal government of billions of dollars in tax revenues while America suffers through an economic depression?
On the other side of the tax coin, Senate testimony by oil company CEO’s indicated that they paid millions of dollars in taxes on their profits; meanwhile, if Obama had his way, those executives would likewise be in the unemployment line, only without their 99-week lifeline pittance that millions of unemployed Americans have been on since this problem started back in 2008 when it became painfully clear that the Senator who only had the guts to vote “present” would soon become president.
The simple answer to all of this can be seen in the amount of protection money corporations pay each year for lobbyists to grease the palms of politicians. I’ve seen it in the agriculture industry where agricultural organizations pay large sums of money to politicians they claim to oppose because, as was stated in one meeting I attended, to not donate to their political reelection campaigns would be even more disastrous than parting with the money. By any other definition that is extortion.
While it may technically be legal for corporations to lobby themselves into the position of receiving a $3.2 billion tax refund on $5.1 billion in profits it’s certainly wrong. While politicians line their pockets thru tax policy or other nefarious means, America gets stiffed.
All this certainly makes a strong case for a flat tax, something that former presidential candidate Steve Forbes argued for years ago during his unsuccessful bid for President.
Consider the amount of bloated and expensive bureaucracy that could be eliminated overnight by burning the tax code and putting in place a one-page document that spells out the percentage of income from all wage earners and corporations that would go to the federal government under the caveat that there would no longer be deductions, loopholes or other such incentives. You could eliminate the IRS and thousand of tax lawyers on the public dole in one fell swoop! Suffice to say that if everyone with an income in America paid a fixed percentage (for argument’s sake, let’s say 10%) of it towards the federal government, regardless of income, again with no deductions or credits, several things would most definitely occur:
- The entire tax system would instantly be fair
- The effective tax rate to individuals paying federal taxes would go down
- More people would be employed because corporations would have more money with which to invest and employ more people
- The federal government would have more than enough money to use
The later point was proven in spades when President Ronald Reagan lowered the top marginal tax rate from 78 percent to 28 percent. The federal government saw more revenue generated from that one single act than any other act of Congress in the history of the United States.
Then again it’s already been shown by the Heritage Foundation that Washington DC does not suffer due to a lack of money; America’s financial woes are a direct result of over-spending and spending on things we just do not want or need.
Of course we’ll never see such a simple plan under the current political regime here in America because the tax code, for all its thousands of pages and weight, is not a means by which government extracts money from the private sector to run the system, but is rather a means of control over “we the people.”
Until we wrest control away from the government and gain the power back that the phrase “we the people” truly connotes, then we will forever be serfs in a fiefdom made up of rich politicians who’s only role in life is to gain more power.