Some folks are
born silver spoon in hand, Lord, don't they help themselves,
But when the taxman comes to the door, Lord, the house looks like a rummage sale
But when the taxman comes to the door, Lord, the house looks like a rummage sale
Creedence
Clearwater Revival, “Fortunate Son”
The recent Government Accounting Office
report showing that large American corporations pay only about
one-third of the legal corporate tax rate1
represents the logical culmination of the major economic trends of
the last thirty years.
With the rise of globalization since the
late-1970s, the U.S. economy has been integrated into a larger world
economic system allowing capital to cross national borders freely
while pitting American workers against low-wage workers around the
world, resulting in the stagnation of wages and living standards for
most Americans. The former solidity of American capitalism—with its
large factories producing industrial and consumer goods and employing
millions—has melted into the air of offshore tax havens manned by
large numbers of accountants and lawyers, who produce nothing
tangible but huge profits for corporate executives. In 1952, the
effective corporate tax rate was more than 50 percent; in 2010, it
was 10.5 percent.2
The attitude of corporate leaders is that
they are global, not national, entities that owe nothing to
particular countries—not jobs, nor even taxes.
As one Apple executive told
the New York Times in 2012, “We
sell iPhones in over a hundred countries. We don’t have an
obligation to solve America’s problems.”3
Such is the nature of the “free market” in a global economy.
On closer examination
though, this free market contains some hidden costs. In fact, much
of what defenders of American corporate capitalism describe as the
profits of free enterprise turn out to be founded on a significant
investment by American taxpayers.
In a post on the website
of the journal Foreign
Policy,
Clyde Prestowitz, a top trade official in the Reagan administration,
remembers that in the early-1980s,
“Steve
Jobs and other Apple executives had the funny notion that the U.S.
government had an obligation to help them and asked me and other
negotiators at the Commerce Department and the Office of the U.S.
Trade Representative to help them get on the shelf in Japan.” As
Prestowitz says, the Commerce Department did all it could to help
Apple crack the Japanese market, “and in doing so came to learn
that virtually everything Apple had for sale, from the memory chips
to the cute pointer mouse, had had its origins in some program wholly
or partially supported by U.S. government money.”4
Prestowitz
further points out that Apple continues to rely on American taxpayer
support to maintain its position in the global economy. “Apple's
products still have a large U.S. government R&D content and I'll
bet that the guy who says Apple has no obligation to help Uncle Sam
does strongly believe that Uncle Sam has an obligation to stop
foreign pirating of Apple's intellectual property and to maintain the
deployments of the U.S. Seventh Fleet and of the 100,000 U.S. troops
in the Asia-Pacific region that make it safe for Apple to use supply
chains that stretch through a number of countries such as China and
Japan between which there are long standing and bitter animosities.”
To take another example of a company that
has thrived in this global economy, Wal-Mart has based its success on
the low wages it pays, both to workers in its factories overseas and
to those at its stores. While company CEO Mike Duke makes $23 million
a year, more than half of Wal-Mart's employees made less than $22,400
last year, placing them below poverty level for a family of four.5
How did they survive? With public assistance through such programs as
food stamps, Section 8 rental assistance, free or reduced school
lunches, and Medicaid.6
A 2012 Wal-Mart Associate Benefit Book, in fact, includes a directory
so employees can find their nearest Medicaid office.7
According to a 2010
report titled “Wal-Mart’s Economic Footprint” issued by the
Center for Community Planning and Development at Hunter College in
New York City, “Because
many of Wal-Mart’s employees do not earn enough to make ends meet
they often turn to public assistance. Each Wal-Mart store, averaging
200 employees, costs taxpayers approximately $420,750 annually in
public social services used by store employees. Wal-Mart has
thousands of associates who qualify for Medicaid and other publicly
subsidized care, leaving taxpayers to foot the bill.”8
When Ronald Reagan was running for
president more than 30 years ago, he complained of "welfare
queens" living high on the hog off public largesse. It turns out
those welfare queens aren't living in the inner cities or trailer
parks, but in the corporate boardrooms and executive suites.
1
http://www.gao.gov/products/GAO-13-520
; see also,
http://www.forbes.com/sites/janetnovack/2013/07/01/gao-big-companies-paid-a-12-6-federal-income-tax-rate/
3
http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?pagewanted=all&_r=1&
4 http://prestowitz.foreignpolicy.com/posts/2012/01/23/apple_makes_good_products_but_flawed_arguments
6
http://democrats.edworkforce.house.gov/press-release/low-wages-single-wal-mart-store-cost-taxpayers-about-1-million-every-year-says-new
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