Romney's tax doctrine

Romney's tax doctrine

August 13th, 2011 in Opinion Times

Former Massachusetts Gov. Mitt Romney

Photo by Associated Press/Times Free Press.

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A funny thing happened on the way to the Iowa debate Thursday among Republican presidential aspirants. Mitt Romney, the front-runner, standing on a straw bale platform to engage a group of Iowans in an impromptu afternoon debate, shouted out that, "Corporations are people, my friend."

We're glad to hear Romney say it. It confirms what so many for so long have said about Romney - that he's out of touch with ordinary mainstream Americans. He views the world from a privileged corporate perch, like the one he long occupied as co-founder of Bain Capital, the equity firm where he made his millions buying, chopping up and reselling other companies.

His remark came in an exchange with members of Iowa Citizens for Community Improvement, who asked him to back raising taxes on the wealthy and corporations to help support threatened social security programs. The exchange was reported by New York Times reporter Ashley Parker.

A corporatist view

"We have to make sure that the promises we make in Social Security, Medicare and Medicaid are promises we can keep, and there are various ways of doing that," he said. "One is, we can raise taxes on people," which he has pledged not to do.

"Corporations," the listeners shouted back, according to the report. "Corporations are people, my friend," he shouted back. "No, they're not," the crowd retorted.

"Of course, they are," chuckled Romney. "Everything corporations earn ultimately goes to people. Where do you think it goes."

There's the rub. A portion of corporate earnings do go to executives, employees and stockholders - but hardly in proportional shares. Top executives in big corporations make tens of millions of dollars in total compensation, with stock awards, options awards and bonuses, in addition to salaries. Their wildly disproportional take - the U.S. leads the industrial world in income disparities between executive compensation and workers' salaries - often squeezes or freezes salaries and benefits for ordinary employees' salaries and benefits.

Legal entities, not people

The problem with looking at corporations as "people," however, is a much larger issue. Corporations plainly are not people. They don't breath or bleed.

They are legal entities with no particular purpose or ideology other than their pursuit of business and profits. They are also above many of the rules that apply to individual Americans. For instance, they often can buy their way out of trouble via huge, confidential settlements payoffs of lawsuits.

Just as many fire Americans and offshore jobs, they can also park their headquarters and their earnings - often billions of dollars - offshore, and avoid paying U.S. corporate income taxes. Studies have repeatedly shown, in fact, that most American corporations and foreign corporations that do business in American avoid paying any federal income taxes.

A study released in 2008 by the federal Government Accountability Office, for example, showed that two out of every three US. corporations paid no federal income taxes from 1998 through 2005. The study covered 1.3 million corporations, large and small, with collective sales of $2.5 trillion.

Phenomenal privilege

The privileges accorded corporations, however, are phenomenal. Sen. Bernie Sanders, I-Vt., released last April a list of 10 large American companies that made billions of dollars in profits, that paid little or no federal taxess, or that received money back from the Treasury in tax credits or bailouts, and that in some cases received billions in bailout money, and hundreds of millions to billions of dollars in tax deductions.

A few examples: ExxonMobil made $19 billion in profits in 2009, paid no federal income taxes, and received a $156 million rebate from the IRS. Bank of America made $4.4 billion, received almost $1 trillion in bailout funds, and got a $1.9 billion tax refund. General Electric made profits of $26 billion in the United States between 2005 and 2010, paid no taxes, and received a $4.1 billion refund from the IRS. Most used retained earnings that were spent partly on lobbyists to secure contracts of favors from Congress and tax loopholes from the IRS.

Free speech, secret funding

With last year's U.S. Supreme Court 5-4 ruling by the conservative majority in the Citizens United ruling, moreover, corporations have now been given higher First Amendment free-speech than ordinary citizens.

They may now spend all the money they wish to fund independent political activities, and do so anonymously and without limits, to influence political elections. Ordinary citizens are not allowed to do that.

With such vast, untaxed wealth and lobbying influence, this nation is trending fast toward an unaccountable corporate takeover of Washington. Indeed, the nation's richest one percent of households, engorged by untaxed corporate wealth, now holds the largest share of America's wealth in 80 years.

Romney and his party, by his own words and views - confusing corporations with people to ward off fair taxes on the former - would fatten that margin by dismantling the social security programs that provide a modest safety net to ordinary Americans whose daily labor is the basis for this nation's wealth.