Corporate lobbyists have a terrible idea they’re pushing during the budget debates. They want to lower the corporate tax rate while also cutting benefits for Social Security and Medicare beneficiaries. Most Republicans and an unfortunately significant number of Democrats have endorsed this bad idea.
But what if instead we asked corporations that are dodging taxes to actually simply pay the statutory rates asked of them?
In the spring of 2011, National People’s Action and the Public Accountability Initiative put out a report looking at tax dodging by the nation’s biggest banks. It found, shockingly, that if these big banks simply paid the rates that were asked of them — much as many Americans pay their tax rates without exploiting excessive deductions and loopholes — we could re-hire all 132,000 teachers laid off during the recession for another year of teaching — twice:
Six banks – Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley together paid income tax at an approximate rate of 11% of their pre-tax US earnings in 2009 and 2010. Had they paid at 35%, what they are legally mandated to pay, the federal government would have received an additional $13 billion in tax revenue. This would cover more than two years of salaries for the 132,000 teacher jobs lost since the economic crisis began in 2008.
Some of these very same banks who have dodged their tax responsibilities are now trying to attack social spending that Americans worked hard for. Remember that Goldman Sachs CEO Lloyd Blankfein recently advocated for cutting Social Security. This is a bank that received a $10 billion taxpayer bailout.
Seniors on Medicare and Social Security did not cause the Great Recession, Wall Street did. And Wall Street and the richest Americans should be asked to pay for the resulting debt, not America’s seniors.
We should look instead to Senator-elect Elizabeth Warren for a credible approach to dealing with the deficit over the long term.
Warren has an alternative, truly “balanced approach” to tackling the deficit. During a campaign debate last month, she laid out a popular vision for dealing with the deficit: cut back on wasteful military and agriculture subsidy spending, and make the rich pay their fair share with higher tax rates. Watch Warren explain: