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Tenth Anniversary of Bush Tax Cuts Marked By Right-Wing Intransigence, Corporate Tax Avoidance
Altaf Rahamatulla on June 9, 2011 - 12:35pm
This week marks the tenth anniversary of the enactment of the first Bush tax cuts for the wealthy. Commenting at the time on the surplus his administration inherited and in favor of flawed trickle-down economics, former President George W. Bush remarked upon its passage: "We recognize, loud and clear, the surplus is not the government's money. The surplus is the people's money. And we ought to trust them with their own money."
In reality, the tax cuts have overwhelmingly favored the rich and been one the primary contributors to the nation's current deficit. The richest five percent of taxpayers have received over 47 percent share of the tax cuts, while the bottom 60 percent received a paltry 13.4 percent. Citizens for Tax Justice (CTJ) provides state-by-state and national figures that indicate that the package has proven to be “fiscally irresponsible, unfair, hypocritical, and not helping the economy.”
The tax cuts, along with the economic downturn and the wars in recent years, are by far the largest contributor to the country's deficit. The cuts cost approximately $2.5 trillion over the past decade. The Center on Budget and Policy Priorities (CBPP) published an excellent analysis, finding that the tax cuts and the wars in Iraq and Afghanistan represented over $500 billion of the country's deficit in 2009, and that "without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance over the next decade." The detrimental impact of this misguided and irresponsible fiscal program have taken an extreme toll on the nation’s economy.
Source: Center on Budget and Policy Priorities
Just as the most affluent are not contributing their fair share, large corporations are engaging in several tax avoidance schemes by utilizing offshore tax havens and other mechanisms. A recent CTJ report reviews the pretax U.S. profits, federal taxes paid and effective tax rates of 12 large companies — American Electric Power, Boeing, Dupont, Exxon Mobil, FedEx, General Electric, Honeywell International, IBM, United Technologies, Verizon Communications, Wells Fargo and Yahoo -and finds incidence of extreme corporate tax avoidance. Despite enjoying substantial profits, the corporations paid next to nothing in federal taxes. In fact, the 12 companies reported $171 billion in pretax US profits from 2008 to 2010, but cumulatively, their "federal income taxes were negative: -$2.5 billion." In total, these corporations actually received $62 billion in tax benefits during this time period as well. USPIRG argues in their analysis, Who Slows the Pace of Tax Reform, that this situation is exacerbated by large corporations' undue influence over the electoral process, which leads to a distorted taxation system that tolerates international havens and provides countless corporate tax loopholes.
Despite these disturbing realities, right-wing officials continue to pursue deep cuts to education, health care and other essential programs, reduce support for working families, provide corporations and the rich with even greater tax breaks, and generally increase the regressivity of the tax structure, placing an even heavier burden on working families in a time of economic hardship.
In a recent New York Times editorial, False Choices, Charles Blow aptly frames the issue:
"This is part of the modern doctrine of a compassion-free conservatism that’s using the fog of the fiscal crisis to push a program of perverse wealth inequality as sound economic policy: The only way to jump-start the economy is to slash taxes on the wealthy and on companies; the only way to compensate for the deficits that those tax cuts exacerbate is to slash benefits to the poor and vulnerable. It would be comical if it weren’t so callous. Not only is this faulty logic, it’s a false choice."
Indeed, conservative approaches to budget pressures at both the federal and state level have amounted to little more than economically-counterproductive and socially-damaging platforms that threaten the prospects for recovery, punish workers and teachers, aim to place public assets in private hands, and prioritize the interests of the rich and corporations over the needs of middle-class families, children, and the elderly.
Full Resources from this Article
Citizens for Tax Justice – Another Decade of Bush Tax Cuts Will Cost More than Twice as Much as the First Decade
This article is part of PSN's email newsletter, The Stateside Dispatch.
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