Monday, April 18, 2011

Big corporations that didn't pay taxes--it's even worse than that: we paid them

Here'sa link to Bernie Sanders' new MoveOn post listing the biggest corporate freeloaders. Folks have been saying that it's bad that these companies haven't paid taxes, which it is, but we are in fact subsidizing them with U.S. taxpayer money. Only because of the way our tax system is set up we don't call it subsidizing or transferring money, we call it a 'tax refund'. There can be 'tax refunds' even when there haven't been any taxes paid, and so no money to refund. I'm not sure when the terminology started, but the first time I became aware of it was in regards to the 'Earned Income Tax Credit' signed into law by Clinton. What the Earned Income Tax Credit is, is essentially free money given to people who don't make a lot of money. It's a sub-rosa social program, one that because it's expressed in the jargon of taxation doesn't sound like one. You get a tax credit on your income, that you don't have almost any taxes on, meaning that you get money from the government instead of paying money. And so far folks haven't started complaining about it en masse. But it's subsidies for folks who don't have any money, particularly people with children, so that they're not as bad off as they would be otherwise.

Similarly, when companies get refunds without paying taxes they're subsidies as well. And those subsidies come from regular taxpayers. The $41 billion, Billion, dollars that we paid to GE this year was money gotten from Americans as a whole. It's the opposite sort of flow that we want to have, and it puts the lie to the idea that the U.S. tax system is one of the most restrictive in the world.

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