I’m not entirely sure what this says about either myself or the president, but I was shocked to hear that his proposal for paying for the American Jobs Act out of existing spending will come entirely from cuts in “tax giveaways.” That is to say, he wants to raise taxes on the plutocrats and their various pseudo-monopolies.
White House budget director Jack Lew outlined Obama’s proposals for paying for the plan, targeting the rich and corporations as the president has in the past to no avail.
The biggest item would raise $400 billion by limiting deductions and exemptions on individuals who earn more than $200,000 per year and families who earn more than $250,000.
He also proposed raising $18 billion by treating the earnings of investment fund managers as ordinary income rather than taxing it at lower capital gains rates.
He would eliminate many oil and gas industry tax breaks to raise $40 billion and change corporate jet depreciation rules to bring in another $3 billion.
According to Lew, The Hill notes:
[T]he total measures proposed by the administration would bring in $467 billion, $20 billion more than the cost of the bill.
Previously the leftist consensus seemed to be (and I would say I agreed) that he would look to cut spending from areas that were a sure thing with Republicans, like the American welfare state. This would have offset any good that his plan did by an equal amount of evil distributed elsewhere. Instead, it turns out he’s targeting tax loopholes, an unjust tax code, and corporate welfare. Whatever the reason for this shift, I’m pleasantly surprised. The Anarcho-Militarist Party, the president’s primary opposition, will not be.
UPDATE (from Tim): Johnston retracts some of his facts in a follow up post, but not all facts. Too bad Reuters could not keep the original URL active: I had to search for Johnston’s name at Reuters to find this follow up.
UPDATE to Tim’s UPDATE: As Tim wrote Johnston made an error in his calculations:
Rupert Murdoch’s News Corp did not get a $4.8 billion tax refund for the past four years, as I reported. Instead, it paid that much in cash for corporate income taxes for the years 2007 through 2010 while earning pre-tax profits of $10.4 billion.
The other facts I reported remain:
* Among the 100 largest companies in the United States, News Corp has the third largest number of subsidiaries in tax havens, a Government Accountability Office study found in 2009.
* On an accounting basis, which measures taxes incurred but often not actually paid for years, News Corp had a tax rate of under 20 percent, little more than half the 35 percent statutory rate, its disclosures show.
* Murdoch has bought companies with tax losses and fought to be able to use them, which reduces his company’s costs.
* News Corp lawyers and accountants are experts at making use of tax deferrals, though the company’s net tax assets have shrunken from $5.7 billion in 2007 to $3.3 billion last year as the benefits were either used or expired.
Rupert Murdoch may not garner as much attention for his financial savvy as he does for his journalistic escapades, which last week led to the shuttering of Britain’s oldest tabloid. But that doesn’t make his money management any less impressive.
Indeed, when it comes to taxes, instead of rendering unto Caesar, Murdoch has Caesar rendering unto him.
Over the past four years Murdoch’s U.S.-based News Corp. has made money on income taxes. Having earned $10.4 billion in profits, News Corp. would have been expected to pay $3.6 billion at the 35 percent corporate tax rate. Instead, it actually collected $4.8 billion in income tax refunds, all or nearly all from the U.S. government (see chart).
The relevant figure is the cash paid tax rate. This is the net amount of corporate income taxes actually paid after refunds. For those four years, it was minus 46 percent, disclosure statements show.
Even on an accounting basis, which measures taxes incurred but often not actually paid for years, News Corp. had a tax rate of under 20 percent, little more than half the 35 percent statutory rate, company disclosures examined by Reuters show. News Corp. had no comment.
Fox News, the editorial pages of his Wall Street Journal and other Murdoch outlets often rail against taxes. Their attacks on government benefits for the elderly, the sick, the jobless and children focus attention on the uses of tax dollars and away from his aggressive efforts to enjoy the benefits of civilization without paying for them.
Many other companies may follow similar practices but most of corporate America doesn’t own one of the country’s most powerful newspaper editorial pages.
David Cay Johnston goes on to explain exactly how Murdoch dodges Uncle Sam.
Verizon, Boeing, Wells Fargo, and other corporations join GE in giving the finger to Uncle Sam [New]
Today’s release details the pretax U.S. profits, federal taxes paid and effective tax rates of (in alphabetical order): American Electric Power, Boeing, Dupont, Exxon Mobil, FedEx, General Electric, Honeywell International, IBM, United Technologies, Verizon Communications, Wells Fargo and Yahoo. CTJ’s full corporate report is scheduled for release this summer.1
Not a single one of the companies paid anything close to the 35 percent statutory tax rate. In fact, the “highest tax” company on our list, Exxon Mobil, paid an effective three-year tax rate of only 14.2 percent. That’s 60 percent below the 35 percent rate that companies are supposed to pay. And over the past two years, Exxon Mobil’s net tax on its $9.9 billion in U.S. pretax profits was a minuscule $39 million, an effective tax rate of only 0.4 percent
Had these 12 companies paid the full 35 percent corporate tax, their federal income taxes over the three years would have totaled $59.9 billion. Instead, they enjoyed so many tax subsidies that they paid $62.4 billion less than that.
If just these 12 companies had paid at a 35 percent tax rate over the past three years, total federal revenues from corporate taxes would have been 12 percent higher than they actually were.
Here is the information on the 12 illustrative companies. Technical notes follow on page 3.
Twelve Corporations: Their U.S. Pretax Profits and Their Federal Income Taxes, 2008–2010
$62.4 billion from just 12 corporations! But teachers, cops, firefighters and other public employees are driving America over a cliff say the right-wing pinochios.
Last month’s discovery that GE paid zero in taxes in 2010 has exploded across the news. But GE is not alone. Rainforest Action Network reviewed the top four banks, oil and coal companies in the country, and found that all of them are gaming the system. In fact, Bank of America, Citi, Massey Energy and Chevron have also all paid zero in federal income taxes this year or in year’s past.
We reviewed 12 of the dirtiest corporate tax dodgers: Bank of America, Citi, JPMorgan, Wells Fargo, Chevron, BP, Shell, Exxon, Massey Energy, Alpha Natural Resources, Peabody Energy and Arch Coal. These 12 banks, oil and coal companies are responsible for foreclosing on millions of people’s homes and polluting our air, water and climate. At the same time, we found that they pay next to nothing into a tax system that provides the very services that protect the homeless, the sick and our environment.
As the graphic below shows, banks, oil and coal companies are making billions in profits annually and paying much less than their fair share in taxes. In fact, the top four oil companies in the country made $1.26 trillion in gross revenues and paid a shocking 2.04% average tax rate.
General Electric, America’s largest corporation, made $14,200,000,000 in profits in 2010 and paid $0 in taxes — that’s right, zero dollars in taxes.
At the same time, C.E.O. Jeffrey Immelt saw his compensation double. Now GE is expected to ask 15,000 of their unionized workers to make major concessions in wages and benefits.
Adding insult to injury, Mr. Immelt is chair of President Obama’s Council on Jobs and Competitiveness. That’s wrong. Mr. Immelt should not lead the administration’s effort to create jobs.
Join Russ Feingold and sign Progressives United’s petition for Mr. Immelt to resign from his position on President Obama’s jobs panel today.
General Electric, the nation’s largest corporation, had a very good year in 2010.
The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.
Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.
Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.
While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.
And guess who President Obama appointed chairman of the President’s Council on Jobs and Competitiveness, a board to get Americans back to work and strengthen our economy? GE’s CEO and Chairman, Jeff Immelt.
That was another episode of the critically acclaimed series The wolves are guarding the henhouse.