Outsourcing Your Job Outsources the Tax Base!
"We don't pay taxes. Only the little people pay taxes."
-Leona Helmsley
-Leona Helmsley
This gap is corporate tax avoidance on the order of 50% of our trade deficit!
What the above graph shows is corporations are using two sets of books, one they tell the Chinese and one they tell the US.
This creates a huge gap on the order of one half to one third of their imports from China. If corporations are this creative with their books with the US and China (the most powerful countries on earth), it is unlikely they are more forthcoming in weaker countries like Panama, Mexico, Vietnam, etc. This gap is corporate tax avoidance on the order of 50% of our trade deficit!
This creates a huge gap on the order of one half to one third of their imports from China. If corporations are this creative with their books with the US and China (the most powerful countries on earth), it is unlikely they are more forthcoming in weaker countries like Panama, Mexico, Vietnam, etc. This gap is corporate tax avoidance on the order of 50% of our trade deficit!
The above chart shows corporate taxes dropping from as high as 30 % of federal revenues in the early 1950's to about 10% today. This loss in revenue has been dumped on the middle class in the form of higher payroll taxes! The revenue from corporate taxes could easily be doubled if globalization was restructured to benefit the workers. While the corporations will shed crocodile tears for the consumer if we raise tariffs, a large amount of the revenue raised will come out of corporate tax avoidance.
The above chart shows that the after tax percentage of corporate profits vs the national income has gone from 6-7% in the 1950's to 11 % in the supposedly progressive Obama administration. (i.e. the corporations are keeping 4% of GDP that Eisenhower would have made them pay to balance the books, but Obama is borrowing. If the GDP is 17.3 trillion and corporations are keeping 4% of it = .04 x 17 trillion = 680 billion dollars that has gone missing.) This is a consequence of globalization and the reduction of tax rates from 50% to 35 %. In 1950 the corporate tax paid for approximately 26% of federal revenue, now it pays for 9%. It's clear from this that the corporations have been large tax beneficiaries of globalization above and beyond the ability to practice Plantation Capitalism by oppressing labor externally and selling to the US market.
If we collected 2% of GDP more in taxes from corporations today (still well below the rate that was done during the Truman / Eisenhower years) we would receive on the order of 374 billion in additional revenue or about 2,634 dollars per employed American. The Federal corporate tax revenue in fiscal 2015 was 341 billion, the charts above make the case that if with a few adjustments we could more than double the rate revenue received from corporations and we would still not be back at the rate of revenue extraction maintained in the 1950's. This tax avoidance is connected at the hip to globalization. Another loss to the taxpayer has been the loss of revenue from all the jobs that aren't here. At an effective tax rate of roughly 32% (income tax 16.7 % + medicare and social security 15.3 %) the loss of 3.4 million jobs to China, 896,000 jobs to Japan, and 800,000 + jobs to Mexico = 5.1 million jobs x 36,000 salary/job x 32% = 58.7 billion in lost tax revenue. This does not count state income and sales taxes. This burden must be borne by those who are still lucky enough to have a job. (About 413 dollars per employed worker in the country). Adding these lost revenues together:
2,634 + 413 = 3047 dollars per job that we could give back to each taxpayer if we were less globalized.
2,634 +413 = 3,047 dollars per job we could give back to each taxpayer if we were less globalized!
Additional losses accrue to the taxpayer from the low salaries that have been present since 1973. If salaries had had simply a modest increase since 1973 of 50% adjusted for inflation ( .8%/ year), the tax revenue would increase by about 50% and this would add roughly a trillion dollars per year to the national tax revenue (i.e. there would be no budget deficit).
If our economy had been healthier, it is possible that much of the social spending that is directed to the criminal justice system and welfare system could be avoided with better jobs. (39 billion spent on prisons each year which is far higher than most countries). If the Corporations / Plantation Capitalists were not putting Miracle Gro on our geopolitical rivals it is possible we could have more of a peace dividend and cut the Department of Defense by 150 - 200 billion dollars but in the present circumstances that is probably not wise. (Another 1000 dollars per taxpayer per year for the road not taken.)
If our economy had been healthier, it is possible that much of the social spending that is directed to the criminal justice system and welfare system could be avoided with better jobs. (39 billion spent on prisons each year which is far higher than most countries). If the Corporations / Plantation Capitalists were not putting Miracle Gro on our geopolitical rivals it is possible we could have more of a peace dividend and cut the Department of Defense by 150 - 200 billion dollars but in the present circumstances that is probably not wise. (Another 1000 dollars per taxpayer per year for the road not taken.)
