{"id":120696,"date":"2021-04-14T08:32:00","date_gmt":"2021-04-14T08:32:00","guid":{"rendered":"https:\/\/www.radiofree.org\/?p=186015"},"modified":"2021-04-14T08:32:00","modified_gmt":"2021-04-14T08:32:00","slug":"whats-driving-the-tax-games-corporations-play-2","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2021\/04\/14\/whats-driving-the-tax-games-corporations-play-2\/","title":{"rendered":"What\u2019s Driving the Tax Games Corporations Play?"},"content":{"rendered":"
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How do we make sure America\u2019s corporations pay their fair share of the nation\u2019s taxes? We cut away, team Biden is now proposing<\/a>, at the thicket of tax loopholes that Corporate America is now so shamelessly exploiting. U.S. corporations \u2014 the world\u2019s most profitable \u2014 are currently paying just 7.8 percent of their profits in federal income taxes. The United States collects, the Treasury Department points out, \u201cless in corporate tax revenues as a share of GDP than almost any advanced economy.\u201d<\/p>\n

The Biden administration\u2019s focus on corporate tax-dodging could hardly be more welcome. But the emerging debate over corporate taxes is so far overlooking one core reality we can\u2019t afford to ignore: To make sure corporations<\/em> pay their fair tax share, we need to make sure individuals<\/em> are paying theirs.<\/p>\n

And right now, of course, rich individuals are not<\/em> paying that fair share. Billionaire Warren Buffett has been famously pointing out<\/a>, for well over a decade now, that he pays taxes at a lower rate than his secretary. No deep pockets today pay over 37 percent of any income dollar in federal income tax. In the middle of the 20th century, by contrast, individual income over $200,000 faced a tax rate just over 90 percent.<\/p>\n

Back in those days, major corporations also faced<\/a> taxes at appreciable rates, around 50 percent of profits from the early 1950s to the late 1970s. And corporations did that paying without much fuss. Their corporate tax departments operated cautiously. Top execs feared getting caught cheating on their corporate tax returns, worried that cheating charges would blemish their company image.<\/p>\n

Larry Langdon, a former tax director at Hewlett-Packard, remembered those days clearly years later in an interview<\/a> with ace tax journalist David Cay Johnston. In his days at Hewlett-Packard, Langdon noted, any questionable tax maneuver would be subject to a simple test.<\/p>\n

\u201cMy boss would say, \u2018I want you to write the article that you imagine that the New York Times<\/em> or Wall Street Journal<\/em> would run if they find out about this, and if the article passes muster, we will consider doing the thing,\u201d he recalled. \u201cThe deals that couldn\u2019t pass that muster were not done.\u201d<\/p>\n

In the mid-20th century, top corporate executives like Larry Langdon\u2019s boss had no particular personal incentive to engage in shady tax deals that might boost their corporation\u2019s bottom-line. Why bother? Any added income they could gain individually from that shady corporate dealing would face a 91 percent tax rate.<\/p>\n

But that sort of corporate caution started evaporating as federal tax rates on high levels of individual<\/em> income started sinking, from 91 to 70 percent in 1964, then from 70 to 50 percent in 1981 and from 50 to 28 percent in 1986. Shady tax maneuvers that fattened corporate bottom lines would turn out to have far more appeal for executives who no longer faced stiff tax rates on their own personal earnings. These execs would soon come to expect<\/em> corporate tax departments to start doing whatever they could, in Langdon\u2019s words, to \u201caggressively reduce\u201d the corporate tax burden.<\/p>\n

And corporate tax departments have been doing that aggressive reducing ever since. Sleepy corporate tax departments have become vital corporate \u201cprofit centers\u201d that have significantly enriched the corporate executive class.<\/p>\n

Just how much enriching has taken place? This past February, Grinnell College economist Eric Ohrn released<\/a> an eye-opening analysis of the impact of just two of the many tax loopholes that Corporate America has worked so diligently to put and keep in place, bonus depreciation and the \u201cDomestic Production Activities Deduction.\u201d<\/p>\n\n

This post was originally published on Radio Free<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

How do we make sure America\u2019s corporations pay their fair share of the nation\u2019s taxes? We cut away, team Biden is now proposing, at the thicket of tax\u2026<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22,4],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/120696"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=120696"}],"version-history":[{"count":1,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/120696\/revisions"}],"predecessor-version":[{"id":120697,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/120696\/revisions\/120697"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=120696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=120696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=120696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}