Fear, Uncertainty, and Doubt: Big Business’s Tax Code Strategy

Today’s New York Times article titled “Major Companies Push the Limits of a Tax Break” strikes me as a microcosm of the challenges with the federal tax code.

It also reveals something else. It’s a marketing strategy called FUD – Fear, Uncertainty, and Doubt – and it’s being used by the rich and powerful to protect tax codes which benefit them by making the rest of us afraid to support efforts to change or eliminate those tax loopholes.

The article describes a 90-year old tax code modification supposedly meant to be helpful to farmers and small businesses. When discussing tax codes as “helpful” it’s important to always remember that that help comes with a price tag. That “help” means that the government isn’t taxing a transaction. That, of course, means less tax revenues into the federal treasury and, like it or not, we will not see our federal debt lowered and our federal budget come closer to balance unless both sides of the ledger – expenses AND revenues – are tackled.

Don’t get me wrong. I don’t oppose every tax code meant to help businesses, especially small businesses. What I vehemently oppose is what seems to have happened here. It appears from this article that this incentive originally intended to benefit farmers and small businesses was eventually expanded and perverted into something that the likes of JPMorgan, Wells Fargo, and GE may have abused.

How does that happen and why aren’t we capable of doing something about it?

Perhaps this is one possible answer.

Whenever the topic turns to the economy, business, and taxation, we seem to allow the rich and powerful to control the discussion and to set the framework for what to do next. We allow the to do this by employing a strategy those of us in the sales and marketing profession know as FUD – Fear, Uncertainty, and Doubt. Here’s how it works.

We allow them to manipulate and control us by controlling the discussion mostly through fear and with heavy doses of uncertainty and doubt. Too many of us are easily (and to some degree, justifiably) frightened by the threat of the loss of the most basic thing needed to survive in a modern society; namely and for starters, a job which pays enough (but not always enough) just for food and shelter.

The things that used to signal the arrival into the middle class – higher education, vacations, and even a little free time to pursue interests outside of two or three part-time jobs – are now available and affordable to fewer and fewer people. All this at a time when taxes are at historic lows, regulation on businesses of all types has been progressively shredded over the last 30 years, the wealth gap is wider than it’s been since the Gilded Age, and the federal debt keeps ballooning.

When it comes to taxes, the rich and powerful use FUD to make the same argument they always make: the beneficial tax treatment of these “…asset exchanges spur investment and help create jobs.” They frame the discussion about raising taxes and doing away with loopholes by saying that if they are taken away there will be less investment and fewer jobs. My response to that argument is pretty consistently this: if that’s true then why is unemployment still just under 8% and why isn’t the economy growing faster? You rich and powerful people are getting what you want and it’s still not enough?

This is overly simplistic, I know, but I still believe it’s a valid stance to take in this argument. It’s still a legitimate way to tear down and take back the framing they want to use when it comes to the tax code. If tax breaks like this are so great, then why are we in the terrible state we’re in and why aren’t the rich and powerful investing more into a recovery?

And when it comes to changing the tax code as a means for helping to reverse the federal government’s mounting debt, the discussion must be first and foremost about the sort of code changes like this one that benefit GE and Wells Fargo long before even thinking about code changes such as eliminating mortgage interest deductions.

It’s far past the time to end the corporate welfare system. That must begin with changes to the corporate tax codes. They must pay more, not less. Corporations have already proven they’ll adapt and, besides, how much more is left for them to outsource overseas? They’ve refused to do anything except hold us all hostage through fear of job loss while they sit atop record-setting profits.

It’s time to call their bluff.

One of the greatest challenges we face for reversing tax codes that benefit only the strong, the wealthy, and the powerful is our ability and willingness to call them out on their FUD strategy and to tell them that, “We’re mad as hell and…”Well, you know the rest.

More than that, our elected officials need to know they can’t use FUD on us either. If they have the courage to stand up to big money and the power elite, then they need to know that we will stand with them. We need more people like Bernie Sanders and Elizabeth Warren who seem to actually care about the middle class enough to stand up to Wall Street, big corporations, and the infinitesimally small number of wealthy people in America who already have rigged the system far too long and far too much to their advantage.

The wealthy aren’t doing anything much to help the rest of us, so why should we keep kowtowing to them and their interests? Let’s close tax loopholes that benefit large and wealthy corporations. It’s a better place to start than with my home mortgage interest deduction.

Click here to find your Congressional Representative and tell him/her what you think. It’s the only way they’ll know.

Click here to learn more about and to get involved with Coffee Party USA and the work they’re doing to restore our democracy.

The Invisible Hand Wants More Hand Outs

The New York Times published an article on December 1 titled As Companies Seek Tax Deals, Governments Pay High Price.

It ought to disturb everyone who isn’t in the 1%. To begin with, it should have been “Citizens” instead of “Government” as we’re the ones who pay the price.

We should all be disturbed by the amount of public money being extorted by companies from all levels of government. They can do this, in my opinion, because we let them.

How do we let them? I think it begins with the fact that too many of our fellow citizens are quaffing copious amounts the Randian Kool-Aid-turned-Tea-Party-tea that’s being served up so generously by the high priests and priestesses who worship The Invisible Hand from inside the GOP, from within their broadcasting company, Fox, their newspaper publisher, The Wall Street Journal, and from all the their faithful followers.

It seems clear to me that big money, politics, and business have combined into a force the likes of which none of us has seen in our lifetimes. The level of concentrated wealth and power is all but incomprehensible (who among us really understands what a trillion dollars is?), and we and our progeny will be the ones who pay the tab when The Invisible Hand brings it to our table for all the blind, willful, and excessive drinking we’re doing now.

I do believe there’s something we can do about it.

I think it starts by voting for progressive people who will truly represent ordinary citizens and then demanding real representation and leadership from those elected officials; from city councils on up through the president.

I also think we citizens need to present calm, rational, and most of all, vocal objection about the imbalance, inequity, and unfairness to each other and to our elected officials. They do, after all, work for us. It’s incumbent on us as citizens to hold them accountable. They need to know that we’re not going to tolerate – or vote for them – if they continue to offer sweetheart deals to so-called “job creators” who don’t create jobs and who, in the end, only bankrupt us and our governments.

Could it be that part of the reason governments at all levels can’t balance budgets includes expenditures like the $80 billion (yes, billion with a ‘b’, as in bull****) a year that’s being given away in incentives? If these incentives are so effective, shouldn’t we be asking corporations (and mostly the big ones) where are the jobs?

(Let me hasten to say at this point that I have nothing against corporations, profits, or wealth. I don’t begrudge anyone their hard-earned and honestly-achieved wealth. I’m not a socialist (ok, maybe I am just a little), and I’m certainly not a fascist or a communist. I’m registered non-partisan, have never held elected office, and have never been in a union. As of today, I’m an unemployed sales and marketing executive who wants to work and who cares enough about how this impacts his family, his neighbors, our society to take time from job searching to post this.)

Make no mistake. Politicians are just as culpable as corporations in this mess.

As this NYT article points out, politicians tend to be weak negotiators who have the unenviable task of having to convince us in the simplest terms and most expeditious way possible every few years to reelect them back into their jobs. Some (and for the more jaded among us, maybe most) politicians seem to behave in such a way most of the time as to convince us that they’ll say and do just about anything to win their jobs back.

Is it any wonder that they will do a deal – even bad deals – with a corporation just to stake the claim to have brought jobs to their constituents? It is worth wondering about only if we don’t pay attention to the deals they’re cutting and then don’t hold them accountable to what we value in addition to a job.

And therein rest their defense for their actions. We don’t pay attention, we stay silent, and we seem willing to accept any condition so long as there’s the promise of employment.

Politicians know that we seem, on the whole, to not pay very much attention. They know lots of us can be pretty easily duped into believing almost anything. What other explanation is there for the viewership of Fox News and movements like the Tea Party, birtherism, and climate science deniers?

Politicians can remain confident that we’ll be too distracted by The Walking Dead, Dancing With The Stars, and the latest South Korean music video on YouTube to pay attention to what they’re doing. They know most of us will keep getting our information from the talking heads screeching the loudest at us from inside our self-imposed information bubbles. (Yes, I’m looking at you, Fox News viewers.)

Most of us can be counted on to look at the so-called collaboration between government and corporations through a short-term lens, and to then heap praise (and votes) upon our elected officials for ostensibly working in partnership with the private sector to create new jobs.

The irony is this.

The Invisible Hand of the free market isn’t concerned with real partnership. It’s about winners and losers. That cannot be what’s best in these “partnerships” between private companies and the public sector. Just consider these factors:
1. There are no contractual and legally binding obligations on the part of the corporation, and there’s no recourse to recover our “investments” should the venture fail
2. There’s no assurance as to if and when those jobs will actually materialize
3. There are no promises that any job will actually pay a living wage or how long it will last
4. There appears to be little scrutiny of the corporation’s past behaviors or results in these matters
5. No one seems to be examining or considering if the facts and evidence show whether or not those jobs would have been created without the incentive

And, since when did The Invisible Hand need incentives from government?

To compound the challenges and as the New York Times article points out, elected officials are ill-equipped to negotiate. They are basically held hostage by corporations. We go on about our lives oblivious to the tabs our politicians are running up for us and what could have been done with those corporate welfare funds.

               “The practical consequences can be easily seen. The Manhattan Institute for Policy Research, a conservative group, found that the amount New York spends on film credits every year equals the cost of hiring 5,000 public-school teachers.”

I understand and, yes, even appreciate and applaud the basic tenants of capitalism. I understand that corporations have an obligation to shareholders first and foremost. I don’t deny nor argue that they ought not to consider and pursue the deals that are best for them and their shareholders. The problem I have is when those decisions about how best to maximize profit are made without concern for the moral, ethical, and economic consequences to us as citizens and to society at large. Profit cannot and should not be the only consideration by people who run companies. We’re all in this together.

Again, it’s not only corporations at fault. They have a duplicitous partner in this dance.

Ill-equipped and out-matched government officials not only are manipulated by corporations they are actually competing with one another to see who can give away the most money to attract the corporations.

Think about that. Our elected officials are negotiating against each other to see who can “win the business” with corporations by giving away the most money – our money – while they get nothing that’s legally binding in return.

               A group of taxpayers in Michigan and Ohio went as far as suing DaimlerChrysler after Ohio and the City of Toledo awarded the automaker $280 million in the late 1990s. The suit argued that it was unfair for one taxpayer to be given a break at the expense of all others.

              The suit made its way to the Supreme Court, and G.M. and Ford signed on to briefs supporting Daimler, as did local governments. The National Governors Association warned the court that prohibiting incentives could lead to jobs moving overseas. “This is the economic reality,” the association said in a brief.

              The governors offered no hard evidence of the effectiveness of tax credits, but the Supreme Court did not consider whether they worked anyway. In 2006, the court concluded that the taxpayers did not have the legal standing to challenge Ohio’s tax actions in federal court.

There’s only one way this can go under current circumstances. Unchecked and unchanged, the bidding will be won by whatever community is willing to give away the most with almost nothing assured in return. And, whose money is it? Yours and mine.

I don’t claim to understand every detail and all the nuance. What I clearly don’t understand is all the anger and rancor coming from anyone outside the 1% in America about the role of government. They seem intent on allowing themselves to be guided by what they perceive to be the benefits of The Invisible Hand and all that will trickle down to them. Is there another explanation for why some of us appear to have elevated corporations to some pretty lofty status while simultaneously vilifying government at all levels?

It makes wonder how it is that so many people who claim to want smaller government and cuts to social programs seem to be the very same people who….

…Rail against today’s tax rates – which are at historic lows – but don’t complain about their tax dollars subsidizing corporations

…Complain about their tax dollars being spent on social programs that benefit the so-called “takers” at a time when unemployment is still too high, the wealth gap is at levels not seen since the Gilded Age of the robber barons, corporations are enjoying record profits while they get more and more government handouts, and yet those magnanimous “job creators” don’t seem to be creating many jobs

…Despite corporate welfare, believe that government interferes too much with business despite the fact that regulatory bogeymen like the SEC and EPA have been progressively stripped of their oversight authority

Why isn’t there more outrage about corporate welfare from the people who so strongly believe in free market forces and less government?

And, why aren’t all citizens demanding that our elected officials work on and pass legislation to simplify THOSE tax codes first so that corporations pay their fair share like the rest of us?

After all, aren’t corporations and the people who work for them part of the society in which we all live?

Don’t employees, managers, stakeholders, customers, and suppliers all benefit from a government that educates our children, is responsible for public safety, infrastructure, and the like?

(And by the way, no, you corporations did NOT build public education, infrastructure, police forces, fire stations, etc. Good thing, too.)

So, the over-arching question I’m asking is this. What’s with all this requirement (extortion, really) for tax breaks and incentives to be given to corporations in order for them to compete?

Isn’t The Invisible Hand enough…..or can’t they make it without hand outs?

Reagan–No Loopholes For Millionaires

So if the holy man of the GOP said it, and the holy man of the Democrats (who ain’t so much what was hoped for after all) is saying it, how come the resistance is almost exclusively from just one side?

Hint: It has nothing to do with facts.

59 seconds of undeniable reality at http://youtu.be/cgbJ-Fs1ikA

The Inconvenient Truths About the Economy and the GOP

First Trust chief economist Brian Wesbury’s 2nd Quarter GDP research reports…

“Corporate profits were also revised up slightly, to a new all-time record high. Profits were up at a 13.7% annual rate in Q2 and are up 8.5% versus a year ago.”

How’s that for an inconvenient truth for the GOP, for their big business puppet masters, and for the inexplicable non-two-percenters who defend them both?

So where are the jobs?
Where’s the recovery?
Anyone? Anyone?

Greta? Gretchen? Shawn? O’Reilly? Anyone?

Herman? Michele? Rick? Mitt? Sarah? Anyone?

How come none of them talk about this?

Corporate profits are at historic levels, as is the wealth gap. Taxes are already at historically low levels, as are interest rates on credit for those rich corporations and individuals who have access to it and the neo-cons, Randians, tea baggers and the GOP want to blame all of our problems in our economy on, what, overpaid civil servants, the 11% of American workers still in a union, illegal immigrants, and the poor and working poor?

Isn’t that just a little bit ridiculous?

Senator Sanders asks, "Tax Time? Not for Giant Corporations"

From Senator Bernie Sanders

Release: Tax Time? Not for Giant Corporations

March 27, 2011
Sanders Calls for Shared Sacrifice

BURLINGTON, Vt., March 27 – While hard working Americans fill out their income tax returns this tax season, General Electric and other giant profitable corporations are avoiding U.S. taxes altogether.

With Congress returning to Capitol Hill on Monday to debate steep spending cuts, Sen. Bernie Sanders (I-Vt.) said the wealthiest Americans and most profitable corporations must do their share to help bring down our record-breaking deficit.

Sanders renewed his call for shared sacrifice after it was reported that General Electric and other major corporations paid no U.S. taxes after posting huge profits. Sanders said it is grossly unfair for congressional Republicans to propose major cuts to Head Start, Pell Grants, the Social Security Administration, nutrition grants for pregnant low-income women and the Environmental Protection Agency while ignoring the reality that some of the most profitable corporations pay nothing or almost nothing in federal income taxes.

Sanders compiled a list of some of some of the 10 worst corporate income tax avoiders.
1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings. (Source: Exxon Mobil’s 2009 shareholder report filed with the SEC here.)

2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion. (Source: Forbes.com here, ProPublica here and Treasury here.)

3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS. (Source: Citizens for Tax Justice here and The New York Times here. Note: despite rumors to the contrary, the Times has stood by its story.)

4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009. (Source: See 2009 Chevron annual report here. Note 15 on page FS-46 of this report shows a U.S. federal income tax liability of $128 million, but that it was able to defer $147 million for a U.S. federal income tax liability of $-19 million)

5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year. . (Source: Paul Buchheit, professor, DePaul University, here and Citizens for Tax Justice here.)

6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction. (Source: the company’s 2009 annual report, pg. 112, here.)

7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department. (Source: Bloomberg News here, ProPublica here, Treasury Department here.)

8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury. (Source: Paul Buchheit, professor, DePaul University, here, ProPublica here, Treasury Department here.)

9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2006 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction. (Sources: Profits can be found here. The deduction can be found on the company’s 2010 SEC 10-K report to shareholders on 2009 finances, pg. 127, here)

10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent. (Source: The New York Times here)

Sanders has called for closing corporate tax loopholes and eliminating tax breaks for oil and gas companies. He also introduced legislation to impose a 5.4 percent surtax on millionaires that would yield up to $50 billion a year. The senator has said that spending cuts must be paired with new revenue so the federal budget is not balanced solely on the backs of working families.

“We have a deficit problem. It has to be addressed,” Sanders said, “but it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We’ve got to talk about shared sacrifice.”