America is not in debt because of peak oil

corporate pledge of allegiance poster

Image: Propaganda Remix Project.

The all-consuming Washington, D.C. wrangling over debts and deficits, spending and taxing is excluding a large reality of how these financial problems can sensibly and fairly be addressed. These blinders in Congress and the White House come from fact-starved ideologies — mostly from the Republicans — and fear-fed meekness — mostly from the Democrats. Both are furiously dialing for commercial campaign cash.

Take the gigantic world of corporate tax avoidance. Ronald Reagan signed the Tax Reform Act of 1986 that was designed to increase corporate tax revenues by over 30 percent. Today, President Obama wants to diminish or delete some tax loopholes (technically called tax expenditures) for large corporations, but let most of the revenues be cancelled out by lowering the corporate tax rates. How the world changes.

Obama’s mild approach is unacceptable to the big business lobbies and their Republican mascots in Congress. They want more tax breaks so they can keep trillions of more dollars over the next decade.

Exxon, Wells Fargo, Yahoo! — $0 in tax

Lost in this whirl of vast greed and political calculation are options, which if pursued with a sense of fairness for the people of the country, would go a long way in providing revenues for public works jobs — repairing America — which in turn would generate more consumer demand by these workers.

The ultra-accurate Citizens for Tax Justice (CTJ) publishes precise reports on the effective taxes paid by corporations that make an utter mockery of the 35 percent statutory tax rate for corporations.

On June 1, 2011, CTJ released a preview of its forthcoming study of Fortune 500 companies and “the taxes they paid — or failed to pay — over the 2008-2010 period.” Judging by the preview, this report should silence those who say that the U.S. taxes corporations more than other industrialized nations.

What do you think the following profitable corporations paid in actual total federal income taxes in that period: American Electric Power, Boeing, Dupont, ExxonMobil, FedEx, General Electric, Honeywell International, IBM, United Technologies, Verizon Communications, Wells Fargo, and Yahoo? Nothing!

CTJ reports that “from 2008 through 2010, these 12 companies reported $171 billion in pretax U.S. profits. But as a group, their federal income taxes were negative: $2.5 billion.”

CTJ documents that “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, ExxonMobil, paid an effective three-year tax rate of only 14.2 percent…and over the past two years, ExxonMobil’s net tax on its $9.9 billion in U.S. pretax profits was a minuscule $39 million, an effective tax rate of 0.4 percent.”

Next time you hear Republicans like Eric Cantor, John Boehner and Mitch McConnell repeat their statement that corporations are overtaxed and need a break, you can tell them that “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.” CTJ director, Bob McIntyre noted that these 12 companies are “just the tip of an iceberg of widespread corporate tax avoidance.”

The public is not hoodwinked

Of course, most Americans suspect as much, even if they don’t have the exact figures. A recent Gallup poll asked the public’s opinion on where they stand on the tax cuts for the rich and the tax breaks for the corporations. By a 45% margin, they opposed tax cuts for the rich and by a 55% margin, they opposed tax cuts for corporations.

So what are Barack Obama and the Democrats waiting for? They have the undeniable facts and overwhelming public sentiment behind them. Why do they let Cantor, Boehner and McConnell continue to mouth falsehoods without rebuttals of the truth?

It’s obvious. The Democrats want big time money from the executives and political action committees of the Fortune 500. The Democrats are willing to let the Republicans fuzz the debate and dare to try and make Medicare and social security benefits absorb the sacrifices. Indeed last week, the Washington Post headlined Obama signaling to the Republicans that social security “is on the table.” [Editor’s note: President Obama has subsequently announced his willingness to make further cuts to social security. Express your disapproval to his campaign by clicking here.]

Even the meek reporters should no longer fail to challenge the Republicans’ daily mantras.

Should you have any doubts that the corporate state is in firm control of your government, try this test: If you paid a single dollar in federal income tax in any of the years 2008, 2009 and 2010, you paid more than the giant General Electric (GE) company. In that period GE made $7.722 billion in U.S. profit, paid no taxes and received $4.737 billion from the IRS. As the New York Times reported on March 24, teams of GE tax lawyers and accountants are making sure they avoid taxes altogether, shifting the burden to you.

These big companies are laughing at us all the way to the taxpayer-bailed-out banks. They’re even laughing at their own shareholder-owners. The non-financial companies are sitting on about $2 trillion. Inert dollars, producing nothing and earning minuscule interest are better deployed by enlarging the dividend payments to their shareholders. A mere 10% of that sum as dividend payments this year would pump $200 billion into an economy needing more consumer demand.

Reporters and columnists need to start addressing these topics at news conferences with members of Congress and White House staffers. The Washington press corps shouldn’t behave like sheep!

— Ralph Nader, cross-posted from The Nader Page

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  1. says

    This essay contains some great facts, but has nothing to do with peak oil, which provides an entirely new set of even larger problems than the ability of major corporations to gin the system. Let’s look at the two issues individually.

    US tax laws are a tangled mess of carefully-tailored loopholes that allow corporate pirates to rake in huge profits from US operations, while avoiding contributing to the system that maintains and defends their operations. Nader makes that case well. The situation is completely unsustainable long-term, for, as we all learned long ago, there is no such thing as a free lunch. Eventually, if the present circumstances continue, the nation that gives them such prosperity will grind to a pitiful, sputtering halt.

    Peak oil is inevitable, and already upon us. Our own US peak occurred back in the 1970’s, and many other regions have encountered theirs since. Now, “The Big One,” Saudi Arabia, is nearing or at their peak. Deprived of ready supplies of inexpensive energy, the world economy cannot continue as it has.
    The intersection of Peak Oil and the budget deficit occurs at two points. The first is the war in Iraq, ostensibly about ‘weapons of mass destruction’ but really about providing Exxon-Mobil and the rest of the big players with easy access to Iraqi oil. The second is the ‘price shocks’ delivered to the US and world economy in 2007, which triggered a sharp slowdown that eventually led to the bursting of the speculative bubble that had developed. While deflating that bubble was inevitable, the ‘hammer’ method was not what the doctor ordered. Now the US economy has settled into a long-term funk, languishing in an unprecedented state of low initiative, low investment, few jobs, but swollen profits for the blue chips.

    Nader makes several good points here, but seeks to paint the entire spectrum of American politics with a single broad brush. That may be helpful to his own unquenchable ambitions for a political afterlife, but it ignores the reality of an active and increasingly vocal movement, mostly of the center and left, that demands more justice from tax laws, and more revenue from the big corporations. It is essential that activists of both major parties push the issue to the fore, and damn the torpedoes of the Tea party. Economic sanity must be re-established, or we all perish sooner than we planned.

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