Tag Archives: corporations

Low Taxes Destroy Our Small Businesses

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Remember last year when the Republicans laid out the price of a budget deal and it was a giant tax cut for the biggest corporations?  So in the middle of a revenue crisis they forced … less revenue.  Well, imagine that you are a struggling small or medium business in California, and the Republicans gave your nemesis even more power to crush you.

Corporate taxes are on profits. So a tax cut means that the more profitable companies pay back less to the government for their use of the roads, schools, police and fire protection.  The very infrastructure that supports new businesses is weakened.

Meanwhile, smaller businesses that are struggling don’t pay corporate taxes, so tax cuts do nothing for them. And small businesses that make modest profits only pay modest taxes, and don’t care.

On the other hand, the giant monopolistic corporations that are chewing up small businesses, destroying local and regional retailers, take those tax cuts and use them to turn themselves into even better small-business-destroying machines.

For example, the giant Wal-Marts are destroying local and regional retailers.  But it is the Wal-Marts, not the local and regional retailers that are the beneficiaries of tax cuts.  This is why the “usual suspects” who get their campaign funds from the giant companies, and work with lobbyists for the largest corporations are the same ones who always advocate corporate tax cuts.

Businesses Need Customers Not Tax Cuts.

California Government Is Good People But The System Is Designed To Fail

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I was in Sacramento for some meetings this week, and have a few thoughts and observations.

The first is the most important. The people in and around our government are good, dedicated people who are doing those jobs because they care and want to do the right thing.  You don’t make big money in public service.  In the last few decades a government job meant less pay than a comparable “private” sector job and a number of working-environment hassles, like the extra procedures (paperwork and bureaucracy) that are required in public positions to involve transparency and accountability.  And, of course, they have to put up with the Republican-inspired abuse of people who work for the government.  So give these people a break and assume good faith.

After decades of budget cutting our government is universally strapped
for resources and it makes for a difficult workday.  The things people
went into public service to accomplish are being stripped out from
under them by the state’s structured-to-fail system (see below).  I
hope the Bush years trigger some serious thinking about what things
would be like without a government, because we are getting close to
that possibility.

The state government is now structurally designed to fail — and this latest budget deal compounds the problem.  This situation was created on purpose by anti-government ideologues, usually corporate-funded.  Thus really is a choice between government by the people or government by a wealthy few who happen to be in control of large corporations.  To them government is “in the way” of making money.  Government means food and safety inspectors so people don’t get sick and workers don’t get hurt, and protecting workers and the public costs them profits.  Government means regulations stopping them from dumping stuff in the water or air and properly disposing of waste costs them money.  Government means regulations that make them pay back customers who are overcharges.  Government means regulations requiring delivering goods and services that were promised.  SO you can see why the hate government and regulation — they keep them from just taking your money and giving nothing back! 

So they have used the power that comes from their access to corporate resources to set up a state system that is giving them what they want.  They pay petition-gatherers to get anti-government initiatives on the ballot, and then they flood the TV and radio with lying ads that trick people into voting against their own interests — and here we are.

Here are just a few of our designed-to-fail structural problems: 

  • Term limits mean that thinking must be short term, and encourages passing problems along instead of solving them, because then the problems will be “not on my watch.” People who are effective in their jobs are forced out, and voters who want to keep them there are prevented from doing so.
  • The campaign-finance system puts corporate-backed candidates in office by necessitating big money to win elections.  And corporations, designed to amass resources, are perfect vehicles for pushing the interests of the few who control them. 
  • The two-thirds budget requirement means that a few anti-government extremists are able to sabotage the process, keeping any budget from passing and shutting down the state.
  • The disappearance of political reporting in California media means the state’s citizens are uninformed about what is going on.  The corporate-owned media concentrates on sitcoms and what Britney is wearing, and does not let the people find out what government is about.

These are just some of the structural problems, and the system is. of course, structurally designed to keep us from fixing them.  The only way we are going to address this is to get lots and lots of people involved.  The election of Barack Obama tells us this is possible but I despair at amount of work that will have to be done to accomplish it.   

Corporate Tax Trickery

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Here we go again with the “corporate taxes are passed along to the consumer” lie. Instead of telling the public about harm to the public interest from budget cuts, teacher layoffs, privatizing public resources, police cutbacks, etc., instead we hear about how taxing the rich is a terrible thing.
What am I talking about? See The Tax Foundation – Tax Foundation TV, Radio Ads Show That Corporate Income Taxes Cost the Average American Household $3,190. They have a couple of ads their corporate funders are paying them to run.
And of course there is the usual scholarly proof that we should all give ever more money to the corporate rich,

“Research from the Congressional Budget Office shows that in a global economy where capital is highly mobile but workers can’t easily move abroad, workers end up bearing the brunt of corporate taxes. In 2007, Economist William Randolph found that 70 percent of corporate tax burdens fall on employees through lower wages and productivity, while the remaining 30 percent fall on company shareholders.”

Taxes are not a cost that can be “passed on to the customer.” Taxes are calculated as a percentage of profits, after all costs are figured in. A well-run business charges the most it can get for its product or service. If the business has competitors it has to price its product or service in some relationship to competing products or services. Were a business to add to to prices to cover taxes this would increase the price above what had been determined to be the optimal price! If a company were able to raise prices to cover taxes the it would mean the company was previously negligent in not pricing as high as the market would bear.
And if the company was negligent, then increasing prices to cover taxes would increase profits, which would increase taxes, which would require an additional price increase, which would increase profits which would increase taxes. Etc. – you get the picture. It’s a silly idea.
In the same way, a properly-run business has as many employees as it needs. When profitability caused them to apy taxes, it means they employed the correct number of people to realize that profit, and certainly are not going to lay someone off because they made a profit that was taxed.
But one step further on this. A corporation itself is neutral on taxes. After all, a corporation is just a bundle of contracts, and doesn’t really have interests any more than a chair has interests. It is the owners who have interests and it is a good idea to think about any “passing on” involving corporate taxes is that it can lower the amount of money that is “passed on” to those people at the top of the economic ladder. Realizing this changes the way the brain understands the problem here. The fundamental question then becomes WHO is benefiting from our economy, and our legal infrastructure that creates and protects corporations. It really is about which people are getting the cash, and seen in this light, this idea of lowering or elimminating corporate taxes takes on a new meaning.
This ad plays on public misunderstanding of taxes – a misunderstanding previously created by the same crowd. (Similar to the idea that if you earn a penny over $250K all of your earnings are taxed at the higher rate.) So it is like a further step in a strategy of creating increasing ignorance, so that you can further harvest the public… (Why can’t WE think in terms of multi-stage strategies, but to instead increase public understanding and appreciation of democracy?)
So, when will we start hearing about the harm caused to the public interest by reduced taxes on corporations and the rich causing us to lay off teachers, cut police and firefighters, defer infrastructure maintenance, etc.? When do we hear about how this hurts, instead of always about how taxes hurt the rich?