The 1% – They Always Have Some Mighty Fine WhineBy
With their “We are the 99%” chant, Occupy Wall Street protesters call for and end to the corporate corruption of democracy, to America’s two-tiered system of justice, and to the rigged economics that concentrates the nation’s wealth in the hands of the top 1%. By cheating, says Rolling Stone contributing editor Matt Taibbi, who reminds readers that even as it had its hand out for a taxpayer-funded bailout, Goldman Sachs’ effective tax rate was 1% in 2008, “the same year the bank reported $2.9 billion in profits, and paid out over $10 billion in compensation.” At the time, Texas Democrat Rep. Lloyd Doggett explained that the problem was larger than Goldman Sachs, “With the right hand out begging for bailout money, the left is hiding it offshore.”
The other day, I posted a video from Jared Bernstein critiquing the proposed repatriation tax holiday sponsored by Sen. Kay Hagan (D-NC) and Sen. John McCain (R-AZ). Taibbi lists four ways in which Wall Street makes a killing cheating the system, but let’s examine how the 1% whines about it all the way to their own banks.
- After the finance industry brought the world economy to its knees and their employers went to the American taxpayers for a bailout, traders earning well into six figures whined that they bore no personal responsibility for their participation, and how dare taxpayers balk at paying them their six- and seven-figure bonuses. Wall Street’s Most Unindicted whined, and how dare President Obama call them “fat cats.”
- By several measures, the individual tax burden in this country is far lower than it was under that notorious, confiscatory, Democratic despot, Dwight Eisenhower, yet some of the same people mentioned above whine that they are over-taxed by oppressive “big government.” Maybe they just don’t get out (of the country) enough.
- The U.S. Chamber of Commerce rends its garments over “punishing” government regulations. Business leaders complain that over-regulation is making America uncompetitive, that it will drive domestic corporations offshore to more business-friendly countries. Yet a recent study by the World Bank ranks the U.S. 4th in the world in ease of setting up a business. Just where do the whiners think they are going to go?
- Oh, but they whine rhapsodically about the oppressive U.S. corporate tax rate, how we have one of the highest tax rates in the developed world. They know full well that few of our largest corporations actually pay that 35 percent, that they pay small armies of accountants and tax attorneys to ensure that those who pay any tax at all pay closer to 28 percent (estimates vary), while some pay nothing or even get money back from the government, that is, from the American taxpayer. Twenty-eight percent is bit higher than the average effective rate for industrialized countries (about 23 percent), but is that spread really what the whining is about?
According to the GAO, 55 percent of U.S. firms paid no federal income taxes during at least one year between 1998 and 2005. Even then, thousands of firms set up tax shelters in the Cayman Islands and elsewhere and park their profits offshore to evade taxes, waiting — thanks to the first repatriation tax holiday under President George W. Bush — for the pressure of another recession and high unemployment so they can whine to the public once more about how they would create jobs here at home again if only Congress would allow them to repatriate their offshore profits not at 35%, not at 28%, and not at 23%, but at 5.25%. According to the GAO report, that’s a deal only most corporations doing business in the United States and paying nothing in federal income tax could pass up.
All that is preface to this rhetorical question: What reduced tax rate, what reduced level of regulation — short of Somalia’s — would stop these people from whining anyway?