Forum Post: The Corporate Betrayal of America ~ Class War on the Corporate Front

We're in a decades long Class War, we're losing because we are oblivious.

The Corporate Betrayal of America -- Ripping off the Public, Running off with the Profits to Avoid Taxes

April 7, 2013 |

Multinational corporations have built their businesses on the backs of American taxpayers. They've depended on government research, national defense, the legal and educational systems, and our infrastructure.

Yet they've turned around and mocked us with declining tax payments. They've cut workers. They've refused to invest their massive profits in job-producing research and development. And they've insulted existing employees with low wages and dwindling retirement support.

As a final disdainful act, many of them have tried to convince us that they LOSE money in the U.S. while only making profits overseas.

Here are the facts.

Business Built on Our Backs

(a) Research

The most essential aspect of business growth is the long-term basic research that is largely conducted with government money [3]. Starting in the 1950s, taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health (pharmaceuticals), and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for corporate product development. Even today 60% of university research [4] is government-supported.

The tech industry is a special case, with many computer and communications companies coming of age in the 1990s, when industry funding [3] for computer research declined dramatically and government research funding continued to climb. As of 2009 universities [5] were still receiving ten times more science & engineering funding from government than from industry.

(b) Infrastructure

Thanks to the taxpayer-funded National Highway System [6], corporations have acquired access to markets across the country for over 60 years. Along with road construction came the water, electric, and telephone [7] facilities needed to sustain their businesses.

Today, the publicly supported communications infrastructure allows the richest 10% of Americans to readily manipulate their 80% share of the stock market [8]. CEOs rely onroads and seaports and airports [9] to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business. Private jets use 16 percent [10] of air traffic control resources while paying only 3% of the bill.

(c) Law

A litany of advantages accrues to the business world through the legal system. The wealthiest Americans are the main beneficiaries of tax laws, property rights, zoning rules, patent and copyright provisions, trade pacts, antitrust legislation, and contract regulations. Their companies benefit [11], despite their publicly voiced objections to regulatory agencies, from SBA and SEC guidelines that generally favor business, and from FDA and USDA quality control measures that minimize consumer complaints and product recalls.

The growing numbers of financial industry executives [12] have profited from 30 years of deregulation, most notably the repeal of the Glass-Steagall Act. Lobbying by the financial industry has stifled reasonable proposals like a sales tax on financial transactions [13].

More big advantages are enjoyed by multinational corporations through trade agreements [14] like NAFTA, with international disputes resolved by the business-friendly World Bank, International Monetary Fund, and World Trade Organization. Federal judicial law [15] protects our biggest companies from foreign infringement. The proposed Trans-Pacific Partnership [16] would put governments around the world at the mercy of corporate decision-makers.

(d) Education

Public colleges have helped to train the chemists, physicists, chip designers, programmers, engineers, production line workers, market analysts, and testers who create modern technological devices. At the primary and secondary levels, the "equal opportunity" principle mandated by the Supreme Court in Brown vs. the Board of Education has contributed to business growth, building the math and language skills that until recently led the world.

(e) Defense

The U.S. government will be spending $55 billion on Homeland Security [17] this year, in addition to $673 billion for the military. Most of their resources, along with local police and emergency services and the National Guard, are focused on crimes against wealth.

Belittling Us Instead Of Paying Us Back

Instead of paying for their decades of government-supported growth, corporations have nearly stopped paying taxes, leaving payroll deductions [18] and individual income taxes as the main sources of federal revenue.

From 2003 to 2011 total corporate profits [19] more than doubled from $900 billion to almost $2 trillion, but the corporate income tax rate [19] dropped by more than half, from 22.5% to 10%.

On top of this, the most profitable corporations get the biggest subsidies. The Federal Reserve [20] provided more than $16 trillion in welfare assistance to financial institutions and corporations. According to U.S. PIRG and Citizens for Tax Justice [21], 280 top-earning Fortune 500 companies, which together paid only half of the maximum 35 percent corporate tax rate, received $223 billion in tax subsidies.

What have they been doing with their windfall profits? Anywhere from $2.2 trillion [22] to$3.4 trillion [23] in cash is being held by non-financial corporations, who have chosen to fatten stockholders rather than invest in new production facilities and the employees needed to make them functional. Worse yet, as reported by The Nation [24], Market Watch [25], and Business Insider [26], they've been steadily cutting jobs [27] in order to 'streamline' their operations.

For the employees who remain, average real wages [28] were $17.42 in 2007, down from $19.34 in 1972 (based on 2007 dollars). Wages as a percentage of the economy are at an all-time low [29].

An Added Insult -- Profits Declared Overseas, But Not in the U.S.

Multinational corporations use the vacuous argument of an excessive U.S. tax rate to defend their tax avoidance, although in reality the U.S. has the third-lowest rate of tax revenue per GDP [30] among all OECD countries.

The biggest tax avoiders are not content to just shirk their tax responsibilities. To sustain the image of profitmaking for their investors, many of them claim hefty worldwide incomes while reporting little or no income in the United States. Pfizer [31], for example, just declared their fifth straight annual loss in the U.S., despite a five-year income total of over $50 billion.

A review of SEC data [32] reveals more chicanery. In the last two years Citigroup reported $27.8 billion in foreign income, but a $5 billion loss in the United States. Exxon credits the U.S. for 1/3 of its revenue and 40% of its assets, but only 15% of its income. Apple has 2/3 of its employees in the U.S. but claims only 1/3 of its profits as U.S. income.

Summing Up the Absurdity: You Made Us the Best, But We Don't Have To Pay

Forbes [33] responded to suggestions of American decline with this stirring defense: "We lead the world in Internet innovation, music, movies, biotech and many other technological fields that require out-of-the-box thinking. From Apple to DreamWorks Studios, from Amazon to Zynga, we are the world's innovators."

They might have added, "And we don't have to give anything back to the people who made it all possible."

Source URL & 36 Links: http://www.alternet.org/corporate-accountability-and-workplace/corporate-betrayal-america-ripping-public-running-profits